[Federal Register Volume 61, Number 36 (Thursday, February 22, 1996)]
[Proposed Rules]
[Pages 6801-6803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4004]



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FEDERAL TRADE COMMISSION

16 CFR Part 305


Rule Concerning Disclosures Regarding Energy Consumption and 
Water Use of Certain Home Appliances and Other Products Required Under 
the Energy Policy and Conservation Act (``Appliance Labeling Rule'')

AGENCY: Federal Trade Commission.

ACTION: Proposed rule and request for comments.

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SUMMARY: The Federal Trade Commission (``Commission'') proposes to 
amend its Appliance Labeling Rule (``the Rule''), 16 CFR Part 305 
(1995), to permit the placement of energy use labels required by the 
Canadian and Mexican governments in a local ``directly adjoining'' the 
Rule's required ``EnergyGuide'' label. Currently, the Rule prohibits 
the affixation of non-required information ``on or directly adjoining'' 
the EnergyGuide. The relaxation of this prohibition would further the 
goal of the North American Free Trade Agreement (``NAFTA'') to make 
compatible the standards-related measures of the signatories to 
facilitate trade in a good or service among the parties. Moreover, the 
amendment would result in considerable savings for the appliance 
manufacturing industry. The Commission seeks written data, views, and 
arguments concerning this proposal.

DATES: Written comments must be submitted on or before April 8, 1996.

ADDRESSES: Written comments should be submitted to the Office of the 
Secretary, Federal Trade Commission, Room 159, Washington, D.C. 20580, 
202-326-2506, and should be submitted, when feasible and not 
burdensome, in five copies. Envelops and comments should be marked: 
``Appliance Labeling Rule comment.''

FOR FURTHER INFORMATION CONTACT: James G. Mills, Attorney, Division of 
Enforcement, Federal Trade Commission, Washington, D.C. 20580 (202-326-
3035).

SUPPLEMENTARY INFORMATION: In a letter to the Commission's staff, the 
Whirlpool Corporation (``Whirlpool'') requested permission to use hang 
tag EnergyGuide labels that have the corresponding ``EnerGuide'' 
appliance energy use label required by Canada printed on the reverse 
side. Whirlpool also asked to use a ``same side'' approach, which a 
Whirlpool representative clarified as meaning a single stick-on or hang 
tag label consisting of the Commission's EnergyGuide immediately next 
to (or above) the appropriately corresponding Canadian EnerGuide, or 
the appliance energy use label required by Mexico, or both labels.
    In support of its request, Whirlpool stated that the continued 
existence of separate appliance labeling requirements among U.S., 
Canada, and Mexico represents an obstacle to free trade among the 
signatories to NAFTA. Whirlpool contended that the consolidation of the 
labels required by the different countries onto a single piece of label 
stock would eliminate that obstacle. Whirlpool also stated that using 
such labels would save Whirlpool significant resources by reducing the 
number of separate U.S. and Canadian models of appliances that 
Whirlpool produces and by reducing labeling expenses.

    Section 305.11(a)(5)(i)(K) of the Rule, 16 CFR 
305.11(a)(5)(i)(K), states that: No marks or information other than 
that specified in this Part shall appear on or directly adjoining 
[the EnergyGuide] label except for a part or publication number 
identification, as desired by the manufacturer. * * * [emphasis 
added]

    The language in this section pertains to labels for refrigerators, 
refrigerator-freezers, freezers, dishwashers, clothes washers, water 
heaters, and room air conditions. Identical language appears in two 
other sections relating to labels for furnaces and pool heaters (16 CFR 
305.11(a)(5)(ii)(I) and central air conditioners (16 CFR 
305.11(a)(5)(iii)(H)(1)). The purpose of this prohibition was to avoid 
having other information detract from the EnergyGuide label. The 
prohibition was not specifically directed at labels required by other 
countries.\1\

    \1\ Although this language prohibits the types of labeling 
practices that Whirlpool has asked permission to use, manufacturers, 
of course, can place the appliance energy labels of other countries, 
or any other labels, in locations on their products that are not 
``on or directly adjoining'' the EnergyGuide.
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    The Commission is considering whether permitting side-by-side or 
back-to-back labeling would be confusing to consumers, and thereby 
reduce the effectiveness of the EnergyGuide. For example, three labels 
side by side might create information overload, resulting in consumers 
ignoring the information. But, the Commission believes that consumers 
may realize that only one label is pertinent to U.S. consumers (because 
the Canadian label is in English and French, and the Mexican label is 
in Spanish \2\). The Commission's label also says in two places that 
the information on the label is derived from U.S. government standard 
tests and utility costs. Further, unlike in the past, the U.S. and 
Canada, and, to a slightly lesser extent, Mexico, now use compatible 
test procedures for identifying energy use, and require information to 
be reported in terms of kilowatt-hour use per year. Thus, the 
information being disclosed on each country's label is similar and this 
may make the possibility of confusion less likely.\3\ Moreover, U.S. 
consumers are already seeing Canadian labels on some appliances 
(especially in the northern states), and possibly Mexican labels, 
although not directly adjoining the EnergyGuide. And, on many packages, 
instruction manuals, and labels, it is common to see information 
presented in more than one language because the products are shipped to 
multiple countries. The Commission believes that, in this increasingly 
global marketplace, consumers may not be confused or misled by the 
presence of multiple appliance energy use labels, as long as they can 
clearly distinguish 

[[Page 6802]]
which one is intended for the U.S. audience.

    \2\ To extent that U.S. residents speak and read only Spanish, 
the Mexican labels may convey useful information about energy 
consumption comparable to what is provided on the U.S. label.
    \3\ As amended, the Commission's Rule now requires labels that 
show a primary energy use disclosure of kilowatt-hour use per year 
for all the products for which it formerly required the disclosure 
of estimated annual operating cost (refrigerators, freezers, clothes 
washers, dishwashers, and water heaters). And, the regulations of 
the three countries require disclosure of an energy efficiency 
number for room air conditioners. Thus, the appliance labeling 
regulations of all three NAFTA signatories now require the same 
primary descriptors of energy use. This reduces the possibility for 
consumers confusion resulting from labels on the same product that 
show energy use in different terms.
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    Accordingly, the Commission believes that it may be beneficial to 
permit appliance manufacturers to combine the appliance energy labels 
required by the U.S., Canada, and Mexico. First, allowing the use of a 
single label consisting of two (or three) labels printed on the same 
label stock, would be consistent with the NAFTA goal of removing 
unnecessary impediments to trade.\4\ Second, multi-national labels 
could enable the appliance manufacturing industry to comply with the 
Commission's Rule and the appliance labeling rules of Canada and Mexico 
at considerably less expense. Therefore, the Commission proposes 
amending the Rule to permit energy use labels required by the other 
NAFTA signatories to adjoin the EnergyGuide directly. Manufacturers 
would still be prohibited from placing other information on or directly 
adjoining the EnergyGuide.

    \4\ The Commission has worked closely with representatives of 
the Canadian EnerGuide program over the past two years to explore 
regulatory harmonization under NAFTA. Canada, like the Commission, 
has been reviewing its appliance labeling rule, and each country has 
considered the research and changes being considered by the other. 
More recently, representatives of the Mexican government have joined 
in this dialogue. Although the Commission intends to continue this 
cooperative pursuit of tri-lateral harmonization to determine 
whether a single label can be designed that effectively fulfills the 
requirements of all three countries, amending the Rule now to 
provide manufacturers greater flexibility in labeling practices is 
an interim step for facilitating trade.
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Section A--Regulatory Flexibility Act

    The provisions of the Regulatory Flexibility Act relating to an 
initial Regulatory Flexibility Act analysis (5 U.S.C. 603-604) are not 
applicable to this document because the Commission presently believes 
that the amendments, if promulgated, ``will not have a significant 
economic impact on a substantial number of small entities'' (5 U.S.C. 
605).
    Because the amendments are not likely to have a significant impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act and the rules implementing it, the 
Commission concludes, based on the information presently available, 
that a regulatory analysis is not now necessary. The Commission 
requests, however, information on whether the proposed amendments would 
have a significant impact on a substantial number of small entities. 
After reviewing any comments received on this subject, the Commission 
will decide whether the preparation of a final regulatory flexibility 
analysis is appropriate.
    In light of the above, the Commission certifies, under Section 605 
of the Regulatory Flexibility Act (5 U.S.C. 605(b)), that the 
amendments proposed today would not, if promulgated, have a significant 
impact on a substantial number of small entities.

Section B--Paperwork Reduction Act

    The proposed amendments would not expand the Appliance Labeling 
Rule's existing recordkeeping and reporting requirements. Because there 
would be no increase in burden hours, the Commission is not requesting 
that the Office of Management and Budget adjust the existing clearance 
for the Appliance Labeling Rule (OMB No. 3084-0069) under the Paper 
Reduction Act (44 U.S.C. 3501 et seq.). To substantiate the accuracy of 
its reporting burden estimate, however, the Commission requests comment 
on the extent of the reporting burden associated with these amendments.

Section C--Invitation To Comment

    Interested persons are hereby notified that they may comment on any 
issue of fact, law or policy that may bear upon the proposed 
amendments. Although the Commission welcomes comments on any aspect of 
the proposed amendments, the Commission is particularly interested in 
comments on the questions in Section D, below. All comments should be 
referenced specifically to either the Commission's questions or the 
section of the proposed rules being discussed.
    The Commission requests the commenters provide representative 
factual data. Individual firms' experiences are relevant to the extent 
they typify industry experience, in general, or that of similar-sized 
forms. Comments opposing the proposed amendments should, if possible, 
suggest a specific alternative. Proposals for alternative regulations 
should include reasons and data that indicate why the alternatives 
would better serve the purposes of the proposed amendments. Comments 
should be supported by a full discussion of all the relevant facts and/
or be based directly on firsthand knowledge, personal experience or 
general understanding of the particular issues addressed by the 
proposed rules.
    Before adopting these proposed amendments as final, the Commission 
will give consideration to any written comments timely submitted to the 
Secretary. Comments submitted will be available for public inspection 
in accordance with the Freedom of Information Act (5 U.S.C. 552) and 
Commission regulations, on normal business days between the hours of 
8:30 a.m. and 5 p.m. at the Public Reference Room (Room 130), Federal 
Trade Commission, 5th Street and Pennsylvania Ave., NW., Washington, DC 
20580.

Section D--Questions and Issues

    Interested persons are invited to address any questions of fact, 
law or policy that they believe may bear upon the proposed amendments. 
The questions concerning issues upon which the Commission particularly 
desires comment, however, are listed below.
    1. Would allowing energy use labels required by the Canadian or 
Mexican governments to be placed next to the U.S. EnergyGuide be likely 
to detract from the effectiveness of the EnergyGuide or cause consumer 
confusion?
    2. Should the Commission limit the information that the amendments 
would permit to be placed ``directly adjoining'' the EnergyGuide only 
to energy use disclosures required by the governments of Canada and 
Mexico? For example, should the amendments permit additional 
information required by the governments of Canada and Mexico, such as 
environmental or safety-related information, also to be placed 
``directly adjoining'' the EnergyGuide?
    3. Should the Commission limit the amendments to apply to energy 
use (or other) information required only by the governments of Canada 
and Mexico, or should the amendments permit energy use (or other) 
information required by the governments of all other nations?

Section E--Proposed Amendments

    For the reasons discussed above, the Commission proposes the 
amendments below to sections 305.11(a)(5)(i)(K) (16 CFR 
305.11(a)(5)(i)(K)), 305.11(a)(5)(ii)(I) (16 CFR 305.11(a)(5)(ii)(I)), 
and 305.11(a)(5)(iii)(H)(1) (16 CFR 305.11(a)(5)(iii)(H)(1)) of the 
Rule to permit (but not require) appliance manufacturers to place the 
energy use disclosure labels required by the governments of Canada and 
Mexico in a location directly adjoining the Commission's Energy Guide.

List of Subjects in 16 CFR Part 305

    Advertising, Energy conservation, Household appliances, Labeling, 
Reporting and recordkeeping requirements.

PART 305--[AMENDED]

    1. The authority citation for Part 305 continues to read as 
follows:


[[Page 6803]]

    Authority: 42 U.S.C. 6294.

    2. It is proposed that section 305.11(a)(5)(i)(K) be revised to 
read as follows:


Sec. 305.11   Labeling for covered products.

    (a) * * *
    (5) * * *
    (i) * * *
    (K) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label, except a part or 
publication number identification may be included on this label, as 
desired by the manufacturer, and the energy use disclosure labels 
required by the governments of Canada or Mexico may appear directly 
adjoining this label, as desired by the manufacturer. If a manufacturer 
elects to use a part or publication number, it must appear in the lower 
right-hand corner of the label and be set in 6-point type or smaller.
* * * * *
    3. It is proposed that section 305.11(a)(5)(ii)(I) be revised to 
read as follows:


Sec. 305.11   Labeling for covered products.

    (a) * * *
    (5) * * *
    (ii) * * *
    (I) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label, except a part or 
publication number identification may be included on this label, as 
desired by the manufacturer, and the energy use disclosure labels 
required by the governments of Canada or Mexico may appear directly 
adjoining this label, as desired by the manufacturer. If a manufacturer 
elects to use a part or publication number, it must appear in the lower 
right-hand corner of the label and be set in 6-point type or smaller.
* * * * *
    4. It is proposed that section 305.11(a)(5)(iii)(H)(1) be revised 
to read as follows:


Sec. 305.11   Labeling for covered products.

    (a) * * *
    (5) * * *
    (iii) * * *
    (H) * * *
    (1) No marks or information other than that specified in this part 
shall appear on or directly adjoining this label, except a part or 
publication number identification may be included on this label, as 
desired by the manufacturer, and the energy use disclosure labels 
required by the governments of Canada or Mexico may appear directly 
adjoining this label, as desired by the manufacturer. If a manufacturer 
elects to use a part or publication number, it must appear in the lower 
right-hand corner of the label and be set in 6-point type or smaller.
* * * * *
    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-4004 Filed 2-21-96; 8:45 am]
BILLING CODE 6750-01-M