The full House of Representatives is scheduled to vote on the measure, House Bill 203, in January.

State lawmakers and advocates say it represents the most complete effort so far among the states to address the use of radio frequency identification, or RFID, microchips.

RFID microchips are smaller than grains of sand. Each chip is linked to an ultrathin antenna strip that can be printed on product packaging labels or built into products themselves. Retailers can use them to track products at a distance.

The antennas pick up electromagnetic energy beamed at them from reader devices stores or other businesses can install. When they pick up the energy, the chips send a unique identification number back to the reader device, remotely identifying the item, potentially unknown to customers.

They work up to 30 feet away and continue to operate long after the initial sale. If shoppers buy the item with a credit card, connecting their names with the product numbers, a record of their travels could be constructed automatically, then shared, as the technology becomes more widespread.

Four states — Massachusetts, California, Utah and Missouri, have attempted to pass legislation to address RFID, according to Katherine Albrecht, founder of the national group CASPIAN, or Consumers Against Supermarket Privacy Invasion and Numbering, an advocacy group focused on consumer privacy. But legislatures in each state so far have not passed related bills.

CASPIANalso has crafted federal legislation against RFID, named the RFIDRight to Know Act of 2003, but it too has languished, she said.

New Hampshire's House Commerce Committee first took up the state's RFIDbill last February and retained it for study, according to committee chairwoman Rep. Sheila Francoeur, R-Hampton. A subcommittee added an amendment this fall that outlines what retailers would be required to do if products contain RFID chips.

Francoeur said one provision would require retailers to inform consumers if a RFID chip is embedded in a product or its packaging at the time of a sale, giving buyers the chance to ask to have the chip removed if they prefer.

The bill also would make it a felony to implant human beings with a "spy chip" without their consent. It would set up a commission to track the technology's growth and monitor its affect on individual privacy rights.

Rep. Neal Kurk, R-Weare, who worked on the amendment, said the state doesn't want to deny retailers use of a possibly helpful technology. But they want retailers to disclose a chip's presence.

"With all technology, it helps you and it hurts you, and the Legislature is trying to make sure the gains outweigh the pains," Kurk said.

The technology, used and managed properly, could have beneficial uses outside the retail sector, he said. For example, if someone had a chip implanted in their skin detailing their medical history and they were involved in a motor vehicle accident, a doctor could access that data immediately and treat them, Kurk added.

But he also warned some companies and the government could abuse the technology. If agencies such as the Department of Defense use data gathered by retailers to create dossiers on individual spending habits as away to track potential terrorists, that could constitute abuse, he argued.

"My concern is that it is not any of the government's business," Kurk said.

Wal-Mart is the only national retailer currently selling products with boxes or packaging with RFID chips embedded, according to the company and CASPIAN. The products include Hewlett-Packard digital printers.

The labels with RFID chips look like typical bar codes. Company officials say the chips help them ensure stocks of high-demand products are adequate.

Wal-Mart's plans call for more than 1,000 stores, clubs and distribution centers to use RFID microchips by the end of 2006, according to a statement from the retailer. Wal-Mart expects the next wave of 300 suppliers to start shipping tagged cases and pallets by January 2007, bringing the total to more than 600 suppliers, according to the same statement.

Members of New Hampshire's CASPIAN chapter have staged protests against the RFID technology at Wal-Mart stores in Bedford and Amherst. They plan more protests in the Concord or Seacoast areas soon, according to Joel Rauch, the chapter's founder.

Anything could have an RFID tag in it, he said, from clothes to appliances to books, letting retailers track spending and lifestyle habits to launch more effective marketing campaigns.

Rauch said he's pleased New Hampshire is passing a law to regulate RFID chips.

"You need to answer the basic question," Rauch said, "of who owns your information when you make a purchase?"

Wal-Mart officials at the retailer's corporate headquarters in Bentonville, Ark., have said the technology is helping them better serve customers. Company officials would provide only previously released statements for this story.

"We can certainly understand and appreciate consumer concern about privacy," the company wrote in a statement last year when it first introduced the technology.

Kurk said he hopes if New Hampshire passes an anti-RFID law, other states will follow.

"My sense is that we will be a glowing beacon that will be like a firefly that will inspire other states to do this," he said.

Federal law could trump New Hampshire's because national retailers such as Wal-Mart ship goods across state lines, Kurk said. But he called that possibility not a reason to prevent the state from acting.

Robert M. Cook can be reached by calling 742-4455, ext. 5396 or via e-mail at bcook@fosters.com.