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Federal Register / Vol. 86, No. 118 / Wednesday, June 23, 2021 / Rules and Regulations
b. Potential Costs The cost increase associated with this rule is related to the SRM test cigarettes used as the ignition source for testing.
A carton of SRM cigarettes contains 10
packs, and each pack contains 20
cigarettes; therefore, two cartons from NIST will contain 400 SRM cigarettes.
Prices for SRM 1196a are set by NIST.
At the time the Commission published the proposed rule, NIST charged $400 to purchase a unit of two cartons of SRM
1196a. Since then, NIST increased the price for two cartons to $437. The current price of SRM 1196a reflects a number of increases in surcharges accrued over the last calendar year, which includes NIST personnel costs and NIST overhead. The price increase from the previous NIST listed price of $400 per unit of two cartons is a price increase of 9.25 percent. At the new perunit price, the cost of a pack of SRM
1196a cigarettes increased from $20 per pack to $21.85.
Manufacturers and importers of mattresses will be responsible for ensuring that their mattress products are tested using SRM 1196a. If a suppliers mattress product does not comply with the requirements, they will need to either modify the product, or cease their manufacture or importation.
Additionally, as required by the CPSIA
and its implementing regulations, manufacturers and importers of youth mattresses would be required to certify that their mattresses intended for children comply with the requirements of the Standard. Many domestic manufacturers of youth mattresses are small entities as defined by SBA. The following analysis reviews possible impacts of using SRM 1196a in the Standard.
The annual cost of adopting the SRM
1196a test cigarette will vary among small firms. Different firms offer a variety of mattress products and have different operational procedures for mattress product development and testing. Among other considerations, the number of mattresses produced annually by small firms is not uniform.
Furthermore, some firms perform testing procedures in-house, while others elect or are required to have testing performed by a CPSC-approved conformity assessment body. The number of new prototypes that a firm will bring to market, and the size of a production run by a small firm, is up to the firm to decide; but the cost per firm of the amendment would be impacted by these individual decisions.
Commission staff reviewed a variety of likely cost increases that may be faced by small firms in adopting SRM

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1196a, in three separate testing scenarios. To determine the likely costs faced by small firms from use of SRM
1196a cigarettes, staff analyzed testing costs related to the Standard in a manner that is consistent with past economic analysis of the industry. The analysis uses commercial data published online for mattress manufacturing, bedding manufacturing, and wholesale mattress product importers acquired from Dun and Bradstreet. Staff also reviewed current mattress products available on the market from a variety of small domestic suppliers and received input from industry on the type and frequency of testing performed under the Standard.
The number of new prototypes that a small firm will bring to market is up to the individual firm to decide, but the cost per firm due to this rule would be impacted by these individual business decisions. A small firm may choose to make new prototypes every year and bring them to market, or it may elect to substitute ticking and modify existing models of mattress products that are selling well or are customer favorites.
The Commission previously published cost estimates for three testing scenarios. 85 FR 68806. To supplement that analysis, the following discusses the effect of the SRM 1196a price increase from $20 per pack to $21.85 per pack since publication of the proposed rule. The most expensive of the three testing scenarios was Scenario 1, which used 46 packs of SRM 1196a to test mattresses and mattress products annually. At $11.50 per pack, a firms cost of using SRM 1196 would be $529
46 packs $11.50 per pack = $529. At $21.85 per pack for SRM 1196a, the same testing scenario would cost a firm $1,005.10 46 packs $21.85 per pack = $1,005.10. As a result of adopting SRM 1196a as the replacement SRM, at a price of $21.85 per pack, the firm would incur a cost increase of $476.10
$1,005.10$529 = $476.10. This example of a cost impact is for the most expensive testing scenario a firm might reasonably choose. The lowest reported annual revenue for any small domestic firm in the mattress manufacturing sector is $128,000. One percent of annual revenue for the firm is $1,280
$128,000 1 percent. For this small domestic supplier, any impact smaller than $1,280 should be considered insignificant. Therefore, the cost increase of $476.10 of using SRM 1196a at the price of $437, as charged by NIST, would not be significant for even the smallest firm currently supplying the sector.
In summary, this rule is not expected to have a significant impact on expected
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benefits or costs of the Standard in 16
CFR part 1632. Both the expected benefits and costs of the amendment are small, and the likely effect on testing costs per new prototype mattress or ticking substitution would be minor, especially when the projected cost is allocated over a production run of complying mattresses.
4. Regulatory Alternatives The Commission considered two basic alternatives: 1 Allow for the use of FSC cigarettes as the ignition source;
or 2 take no action on the smoldering ignition source issue.
Neither SRM 1196a nor FSC cigarettes alternative one would likely have a substantial economic impact. There would, however, be some relative differences in terms of resource costs and potential effects on the level of benefits the Standard affords.
Alternative two would impose a significant economic impact, as it would require firms to use an ignition source that is no longer available, effectively making it impossible for firms to comply with the Standard. The advantages and disadvantages of these two basic alternatives are discussed below.
a. Allow for the Use of FSC Cigarettes Under the first alternative, manufacturers and testers could conduct tests with any available FSC
cigarettes.
A possible advantage of the Commission taking this alternative action is that some of the projected minor increase in resource costs of testing would not be incurred, since FSC cigarettes are less expensive than SRM 1196a. As noted, however, firms would likely have to use many more FSC cigarettes than SRM 1196a cigarettes due to the likelihood that FSC
cigarettes would extinguish before testing is complete.
Disadvantages of the Commission taking this action include an increase in test result variability due to differences in cigarettes. Tests would be less reliable and results would vary depending on which cigarette was used.
This would create uncertainty and confusion surrounding the reliability of tests for compliance with 16 CFR part 1632. Manufacturers and testing firms would have to conduct tests that are either wasteful in terms of extra cigarettes required to complete a test due to cigarettes prematurely extinguishing or have irreproducible and unreliable results.

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