RE: Assembly Bill 264 (Angle) OPPOSE

Dear Assembly Member Buckley:

On behalf of the Grocery Manufacturers of America, I am writing to express our opposition to Assembly Bill 264 (Angle), which would impose a number of restrictions on the use of radio frequency identification (RFID) in a retail environment, scheduled for hearing in the Assembly Commerce and Labor Committee on Friday, April 8.

The Grocery Manufacturers of America is the world’s largest association of food, beverage, and consumer product companies. With U.S. sales of more than $460 billion, GMA members employ more than 2.5 million workers in all 50 states. The organization applies legal, scientific, and political expertise from its member companies to vital food, nutrition, and public policy issues affecting the industry. Led by a board of 42 Chief Executive Officers, GMA speaks for food and consumer product manufacturers at the state, federal and international levels on legislative and regulatory issues.

RFID is the generic term used for technologies that use radio waves to automatically identify items. In common usage, a unique number that identifies a product is stored on a microchip that is attached to an antenna which then can transmit information to a reader. Some well-known and widespread uses in the United States include EZ Pass on highways and bridges and Speed Pass at gas stations.

Within the food, beverage, and consumer products industry, RFID is a part of a broad range of e-commerce activities designed to make the supply chain more effective and efficient. From a manufacturer’s perspective, some of the benefits of electronic product code (EPC)/RFID include the elimination of manual counting and recounting of products in distribution. Warehouses, trucks, backrooms, and shelves will contain readers that will automatically and continually track products and maintain perpetual and accurate inventory data. Out-of-stocks – a problem which plagues the consumer packaged goods industry - could be virtually eliminated through preset triggers which would automatically call for replenishment. This would also allow for theft to be measured and controlled in real time, and will increase the ability to identify counterfeit products. Additionally, product recalls will be conducted in a much more efficient and effective manner through continuous monitoring of products throughout the supply chain.

The manufacturing community takes the issue of consumer privacy very seriously and has been actively involved in addressing the issue since the founding of the MIT AutoID Center in 1999. Field tests and pilots currently underway are allowing participants to think through privacy concerns and the protection of consumer privacy.

The sponsors of EPC, which uses RFID for the automatic identification of consumer products, have adopted guidelines for all companies implementing EPC systems. The guidelines address consumer notice, consumer choice, consumer education and records use, retention and security.

The purpose of the guidelines is to provide a responsible basis for the use of EPC tags on consumer items. The guidelines require that consumers be given clear notice of the presence of EPC on products or their packaging through a logo or identifier; consumers be informed of the choices to discard or remove (or in the future disable) EPC tags from products; consumers be provided with easily obtainable and accurate information about EPC and its applications; and that EPC does not contain, collect or store personally identifiable information. As with conventional barcode technology, data associated with EPC will be collected, used, maintained, stored and protected in compliance with applicable laws. The administrators of the guidelines, EPCglobal, has established January 1, 2005 as the expected date by which companies will follow the guidelines.

Assembly Bill 264 would place a number of restrictions on the use of EPC and RFID at a time when the technology is in its infancy. We believe these restrictions could have a number of unintended consequences that could blunt the potential benefits consumers could derive from the technology.

Please contact me at (916) 447-9425 or kpower@gmabrands.com if you have questions or concerns regarding GMA’s position on this measure or the Guidelines for EPC for Consumer Products.

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