Appendix A to Part 1212 - Findings Under the Consumer Product Safety Act
16:2.0.1.2.50.5.1.1.30 : Appendix A
Appendix A to Part 1212 - Findings Under the Consumer Product
Safety Act
Section 9(f) of the Consumer Product Safety Act (15 U.S.C.
2058(f)) requires the Commission to make findings concerning the
following topics and to include the findings in the rule. Because
the findings are required to be published in the rule, they reflect
the information that was available to the Consumer Product Safety
Commission (“CPSC” or “Commission”) when the standard was issued on
December 22, 1999.
A. The degree and nature of the risk of injury the rule is
designed to eliminate or reduce. The standard is designed to
reduce the risk of death and injury from accidental fires started
by children playing with multi-purpose lighters. The Commission has
identified 196 fires that occurred from 1995 through 1998 that were
started by children under age 5 playing with multi-purpose
lighters. These fires resulted in a total of 35 deaths and 81
injuries. Fire-related injuries include thermal burns - many of
high severity - as well as anoxia and other, less serious injuries.
The societal costs of these fires is estimated to include $175
million in deaths, $13.7 million in injuries, and over $5 million
in property damage. Because these data are from known fires rather
than national estimates, the extent of the total problem may be
greater. Fires started by children under age 5 are those which the
standard would most effectively reduce.
B. The approximate number of consumer products, or types or
classes thereof, subject to the rule. The standard covers
certain flame-producing devices, commonly known as multi-purpose
lighters, that are defined in § 1212.2(a) of 16 CFR part 1212. This
definition includes products that are referred to as micro-torches.
Multi-purpose lighters may use any fuel and may be refillable or
nonrefillable. Approximately 21 million multi-purpose lighters are
expected to be sold to consumers in the U.S. during 1999.
Multi-purpose lighters manufactured in the United States, or
imported, on or after December 22, 2000 will be required to meet
child-resistance requirements. The following products are not
multi-purpose lighters: devices intended primarily for igniting
cigarettes, cigars, and pipes, whether or not such devices are
subject to the requirements of the Safety Standard for Cigarette
Lighters (16 CFR part 1210); devices that contain more than 10 oz.
of fuel; and matches.
C. The need of the public for the consumer products subject
to the rule, and the probable effect of the rule on the utility,
cost, or availability of such products to meet such need.
Consumers use multi-purpose lighters primarily to ignite items such
as candles, fuel for fireplaces, charcoal or gas-fired grills, camp
fires, camp stoves, lanterns, or fuel-fired appliances or devices
or their pilot lights.
1. There will be several types of costs associated with the
rule. Manufacturers would have to devote some resources to the
development or modification of technology to produce
child-resistant multi-purpose lighters. Before being marketed, the
lighters must be tested and certified to the new standard. It is
also possible that manufacturing child-resistant lighters may
require more labor or material than non-child-resistant
lighters.
2. Manufacturers will have to modify their existing
multi-purpose lighters to comply with the rule. In general, costs
that manufacturers would incur in developing, producing, and
selling new complying lighters include the following:
• Research and development toward finding the most promising
approaches to improving child resistance, including building
prototypes and surrogate lighters for preliminary child panel
testing;
• Retooling and other production equipment changes required to
produce more child-resistant multi-purpose lighters, beyond normal
periodic changes made to the plant and equipment;
• Labor and material costs of the additional assembly steps, or
modification of assembly steps, in the manufacturing process;
• The additional labeling, recordkeeping, certification,
testing, and reporting that will be required for each new
model;
• Various administrative costs of compliance, such as legal
support and executive time spent at related meetings and
activities; and
• Lost revenue if sales are adversely affected.
3. Industry sources have not been able to provide firm estimates
of these costs. One major manufacturer has introduced a
child-resistant multi-purpose lighter. However, because that
company did not previously manufacture a non-child-resistant
lighter, it was unable to estimate the incremental cost of
developing and manufacturing child-resistant multi-purpose
lighters.
4. Assuming that there are 20 manufacturers and that each
invests an average of $2 million to develop and market complying
lighters, the total industry cost for research development,
retooling, and compliance testing would be approximately $40
million. If amortized over a period of 10 years, and assuming a
modest 1% sales growth each year, the average of these costs would
be about $0.23 per unit. For a manufacturer with a large market
share (i.e., selling several million units or more a year) the cost
per unit of the development costs could be lower than the estimated
$0.23 per unit, even at the high end of the estimates. On the other
hand, for manufacturers with a small market share, the per-unit
development costs would be greater. Some manufacturers with small
market shares may even drop out of the market (at least
temporarily) or delay entering the market.
5. In addition to the research, development, retooling, and
testing costs, material and labor costs are likely to increase. For
example, additional labor will be required to add the
child-resistant mechanism to the lighter during assembly.
Additional materials may also be needed to produce the
child-resistant mechanism. While CPSC was unable to obtain reliable
estimates, some industry sources indicated that they believed that
these costs would be relatively low, probably less than $0.25 per
unit.
6. Multi-purpose lighters will also be required to have a label
that identifies the manufacturer and the approximate date of
manufacture. However, virtually all products are already labeled in
some way. Since the requirement in the rule allows substantial
flexibility to the manufacturer in terms of things such as color,
size, and location, this requirement is not expected to increase
the costs significantly.
7. Certification and testing costs include costs of producing
surrogate lighters; conducting child panel tests; and issuing and
maintaining records for each model. The largest component of these
costs is believed to be building surrogates and conducting child
panel tests, which, based on CPSC experience, may cost about
$25,000 per lighter model. Administrative expenses associated with
the compliance and related activities are difficult to quantify,
since many such activities associated with the rule would probably
be carried out anyway and the marginal impact of the recommended
rule is probably slight.
8. Multi-purpose lighters are sold in countries other than the
United States. Some manufacturers may develop lighters that meet
the requirements of the rule for distribution in the United States,
but continue to distribute the current, non-child-resistant models
in other countries. Thus, some manufacturers may incur the
incremental costs associated with producing multiple lines of
similar products. These costs could include extra administrative
costs required to maintain different lines and the incremental
costs of producing different lines of similar products, such as
using different molds or different assembly steps. These costs
would, however, be mitigated if similar or identical standards were
adopted by other countries. In total, the rule will likely increase
the cost of manufacturing multi-purpose lighters by about $0.48 per
unit.
9. At the present time, one manufacturer has about 80-90% of the
market for multi-purpose lighters. The other manufacturers,
importers, and private labelers divide up the remaining 10-20% of
the market. Thus, there is already a very high degree of
concentration in the market. Even so, at least two manufacturers
have already entered the market with models that are believed to
meet the requirements of the rule and at least one other firm is
believed to be actively developing a child-resistant lighter.
Therefore, the rule is not expected to have any significant impact
on competition. Moreover, other firms are expected to enter the
market for multi-purpose lighters, and thereby increase
competition, as the market expands. Firms that market
child-resistant multi-purpose lighters before the standard's
effective date may gain an initial competitive advantage. However,
any differential impact is likely to be slight and short-lived.
Other manufacturers can be expected to have child-resistant
multi-purpose lighters developed and ready to market before or soon
after the rule goes into effect.
D. Impact on consumers. Aside from increased safety, the
rule is likely to affect consumers in two ways. First, the
increased cost for producing the child-resistant models will likely
result in higher retail prices for multi-purpose lighters. Second,
the utility derived from child-resistant lighters may be decreased
if complying lighters are less easy to operate.
1. Assuming a 100% markup over the incremental cost to
manufacturers (estimated at $0.48/unit), the rule may be expected
to increase the retail price of multi-purpose lighters by $0.96 per
unit. The per-unit price increase for micro-torches and other
high-end multi-purpose lighters may be higher due to the smaller
numbers of such lighters produced.
2. The utility that consumers receive from multi-purpose
lighters may be reduced if the rule makes the lighters more
difficult to operate. This could result in some consumers switching
to substitute products, such as matches. However, as with
child-resistant cigarette lighters, the increased difficulty of
operating child-resistant multi-purpose lighters is expected to be
slight. Moreover, even if some consumers do switch to other
products, the risk of fire is not expected to increase
significantly. Most cigarette lighters (one possible substitute)
must already meet the same child-resistant standard as those
applicable to multi-purpose lighters. Although consumers that
switch to matches may increase the risk of child-play fires
somewhat, matches seem to be inherently more child resistant than
are non-child-resistant multi-purpose lighters. Previously, the
CPSC determined that non-child-resistant cigarette lighters were
1.4 times as likely as matches to be involved in child-play fires
and 3.9 times as likely to be involved in a child-play death. Thus,
even if some consumers did switch to using matches, the risk of
child-play fires would still likely be less than if they continued
to use non-child-resistant multi-purpose lighters.
3. The total societal costs of fires known to have been started
during 1995 through 1998 by children under age 5 playing with
multi-purpose lighters was approximately $194.2 million, or $48.6
million per year. This is probably an underestimate, since it only
includes the cases of which CPSC is aware. During the same period,
an estimated 20 million multi-purpose lighters were available for
use each year. The societal costs of the fires started by young
children attempting to operate multi-purpose lighters is,
therefore, about $2.43 per lighter ($48.6 million ÷ 20 million
lighters) per year. The rule is expected to reduce this cost by 75
to 84%. Therefore, the expected societal benefit of the rule in
terms of reduced fires, deaths, injuries, and property damage is
expected to be at least $1.82 per complying lighter sold.
4. As discussed above, the rule may increase the cost of
manufacturing multi-purpose lighters by $0.48 and may increase the
retail prices by as much as $0.96. Therefore, assuming that sales
of multi-purpose lighters remain the same, the net benefit
(benefits minus costs) of the rule to consumers is expected to be
at least $0.86 per unit ($1.82 - $0.96). Based on annual sales of
approximately 20 million units per year, the rule would result in
an annual net benefit to consumers at least $17.2 million (20
million × $0.86) annually.
5. The actual level of benefits observed could be higher if some
multi-purpose lighters are stored with the on/off switch in the
“on” position. If a significant number of consumers commonly store
multi-purpose lighters with the switch on, the effective level of
child resistance of multi-purpose lighters currently in use may be
lower than indicated by CPSC's baseline testing. This would
increase the effectiveness of the rule and the value of the net
benefits.
E. Any means of achieving the objective of the order while
minimizing adverse effects on competition or disruption or
dislocation of manufacturing and other commercial practices
consistent with the public health and safety. 1. The
performance requirements of this part 1212 are based on the
Commission's Safety Standard for Cigarette Lighters, 16 CFR part
1210. In developing that standard, the Commission considered the
potential effects on competition and business practices of various
aspects of the standard, and incorporated some burden-reducing
elements into the standard.
2. One possible alternative to this mandatory standard would be
for the Commission to rely on voluntary conformance to the
requirements of the standard to provide safety to consumers. The
expected level of conformance to a voluntary standard is uncertain,
however. Although some of the largest firms may market some
child-resistant multi-purpose lighters that conform to these
requirements, most firms (possibly including some of the largest)
probably would not. Even under generous assumptions about the level
of voluntary conformance, net benefits to consumers would be
substantially lower under this alternative than under the standard.
Thus, the Commission finds that reliance on voluntary conformance
to the provisions of this part 1212 would not adequately reduce the
unreasonable risk associated with multi-purpose lighters.
F. The rule (including its effective date) is reasonably
necessary to eliminate or reduce an unreasonable risk of
injury. The Commission's hazard data and regulatory analysis
demonstrate that multi-purpose lighters covered by the standard
pose an unreasonable risk of death and injury to consumers. The
Commission considered a number of alternatives to address this
risk, and believes that the standard strikes the most reasonable
balance between risk reduction benefits and potential costs.
Further, the amount of time before the standard becomes effective
(one year after publication of the final rule) will provide
manufacturers and importers of most products adequate time to
design, produce, and market safer multi-purpose lighters. Thus, the
Commission finds that the standard and its effective date are
reasonably necessary to reduce the risk of fire-related death and
injury associated with young children playing with multi-purpose
lighters.
G. The benefits expected from the rule bear a reasonable
relationship to its costs. The standard will substantially
reduce the number of fire-related deaths, injuries, and property
damage associated with young children playing with multi-purpose
lighters. The cost of these accidents, which is estimated to be
greater than $48.6 million annually, will also be greatly reduced.
The rule is expected to reduce this societal cost by 75-84%, or by
greater than $36.5 million. The estimated annual costs to the
public are expected to be less than $20 million. Therefore,
substantial net benefits will accrue to consumers. Thus, the
Commission finds that a reasonable relationship exists between the
expected benefits and the expected costs of the standard.
H. The rule imposes the least burdensome requirement which
prevents or adequately reduces the risk of injury for which the
rule is being promulgated. 1. The Commission incorporated a
number of features from the cigarette lighter standard, 16 CFR part
1210, in order to minimize the potential burden of the rule on
industry and consumers. The Commission also considered alternatives
involving different performance and test requirements and different
definitions determining the scope of coverage among products.
Alternatives that would be more burdensome to industry would have
higher costs to consumers. Less burdensome alternatives would have
lowered the risk-reduction benefits to consumers. No alternative
has been identified that would result in a higher level of net
benefits to consumers.
2. A less stringent acceptance criterion of 80% (rather than the
standard's 85%) might slightly reduce costs to industry and
consumers. The safety benefits of this alternative, however, would
likely be reduced disproportionately to the potential reduction in
costs. A higher (90%) acceptance criterion was also considered.
This higher performance level may not be commercially or
technically feasible for many firms, however. The Commission
believes that this more stringent alternative would have
substantial adverse effects on manufacturing and competition, and
would increase costs disproportionate to benefits. The Commission
believes that the requirement that complying multi-purpose lighters
not be operable by at least 85% of children in prescribed tests
strikes a reasonable balance between improved safety for a
substantial majority of young children and other potential fire
victims and the potential for adverse competitive effects and
manufacturing disruption.
3. The standard becomes effective 12 months after it is issued
December 22, 2000. The Commission also considered an effective date
of 6 months after the date of issuance of the final rule. Although
most multi-purpose lighters sold in the U.S. could probably be made
child-resistant within 6 months, the supply of some imported
multi-purpose lighters would be disrupted. The 12-month period in
the standard would minimize this potential effect, and would allow
more time for firms to design, produce, and import complying
multi-purpose lighters. The Commission estimates that there would
be no significant adverse impact on the overall supply of
multi-purpose lighters for the U.S. market. A longer effective date
was deemed unsuitable because it would unduly delay the lifesaving
benefits of the standard and would penalize firms that have already
begun to develop child-resistant multi-purpose lighters.
I. The promulgation of the rule is in the public
interest. As required by the CPSA and the Regulatory
Flexibility Act, the Commission considered the potential benefits
and costs of the standard and various alternatives. The standard
provides substantial net benefits to society. Although certain
alternatives to the final rule were estimated to also have net
benefits to consumers, they would decrease the level of safety.
Therefore, the Commission finds that the standard is in the public
interest.