[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Proposed Rules]
[Pages 39101-39104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19009]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 61, No. 145 / Friday, July 26, 1996 /
Proposed Rules
[[Page 39101]]
FEDERAL TRADE COMMISSION
16 CFR Part 406
Deceptive Advertising and Labeling of Previously Used Lubricating
Oil
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Trade Commission (the ``Commission'') announces
the commencement of a rulemaking proceeding for the Trade Regulation
Rule on Deceptive Advertising and Labeling of Previously Used
Lubricating Oil (``the Used Oil Rule'' or ``the Rule''), 16 CFR Part
406. The proceeding will address whether or not the Used Oil Rule
should be repealed. The Commission invites interested parties to submit
written data, views, and arguments on how the Rule has affected
consumers, businesses and others, and on whether there currently is a
need for the Rule. This document includes a description of the
procedures to be followed, an invitation to submit written comments, a
list of questions and issues upon which the Commission particularly
desires comments, and instructions for prospective witnesses and other
interested persons who desire to participate in the proceeding.
DATES: Written comments must be submitted on or before August 26, 1996.
Notifications of interest in testifying must be submitted on or before
August 26, 1996. If interested parties request the opportunity to
present testimony, the Commission will publish a document in the
Federal Register stating the time and place at which the hearings will
be held and describing the procedures that will be followed in
conducting the hearings. In addition to submitting a request to
testify, interested parties who wish to present testimony must submit,
on or before August 26, 1996, a written comment or statement that
describes the issues on which the party wishes to testify and the
nature of the testimony to be given.
ADDRESS: Written comments and requests to testify should be submitted
to Office of the Secretary, Federal Trade Commission, Room H-159, Sixth
Street and Pennsylvania Ave., NW., Washington, DC 20580, telephone
number (202) 326-2506. Comments and requests to testify should be
identified as ``16 CFR Part 406 Comment--Used Oil Rule'' and ``16 CFR
Part 406 Request to Testify--Used Oil Rule,'' respectively. If
possible, submit comments both in writing and on a personal computer
diskette in Word Perfect or other word processing format (to assist in
processing, please identify the format and version used). Written
comments should be submitted, when feasible and not burdensome, in five
copies.
FOR FURTHER INFORMATION CONTACT: Neil Blickman, Attorney, Federal Trade
Commission, Bureau of Consumer Protection, Division of Enforcement,
Sixth Street and Pennsylvania Ave., NW., Washington, DC 20580, (202)
326-3038.
SUPPLEMENTARY INFORMATION:
I. Introduction
Pursuant to the Federal Trade Commission Act (``FTC Act''), 15
U.S.C. 41-58, and the Administrative Procedure Act, 5 U.S.C. 551-59,
701-06, by this Notice of Proposed Rulemaking (``NPR'') the Commission
initiates a proceeding to consider whether the Used Oil Rule should be
repealed or remain in effect.\1\ The Commission is undertaking this
rulemaking proceeding as part of the Commission's ongoing program of
evaluating trade regulation rules and industry guides to determine
their effectiveness, impact, cost and need. This proceeding also
responds to President Clinton's National Regulatory Reinvention
Initiative, which, among other things, urges agencies to eliminate
obsolete or unnecessary regulations.
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\1\ In accordance with section 18 of the FTC Act, 15 U.S.C. 57a,
the Commission submitted this NPR to the Chairman of the Committee
on Commerce, Science, and Transportation, United States Senate, and
the Chairman of the Committee on Commerce, United Stats House of
Representatives, 30 days prior to its publication in the Federal
Register.
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II. Background Information
Based on the Commission's finding that the new or used status of a
lubricant was material to consumers, the Used Oil Rule was promulgated
by the Commission on August 14, 1964, to prevent deception of consumers
who prefer new and unused lubricating oil. The Rule requires that
advertising, promotional material, and labels for lubricant made from
used oil disclose such previous use. The Rule prohibits any
representation that used lubricating oil is new or unused. In addition,
it prohibits use of the term ``re-refined,'' or any similar term, to
describe previously used lubricating oil unless the physical and
chemical contaminants have been removed by a refining process.
On October 15, 1980, the Used Oil Recycling Act suspended the
provision of the Used Oil Rule requiring labels to disclose the origin
of lubricants made from used oil,\2\ until the Commission issued rules
under the Energy Policy and Conservation Act of 1975 (``EPCA''). The
legislative history indicates Congressional concern that the Used Oil
Rule's labeling requirement had an adverse impact on consumer
acceptance of recycled oil, provided no useful information to consumers
concerning the performance of the oil, and inhibited recycling.
Moreover, the origin labeling requirements in the Used Oil Rule
arguably are inconsistent with the intent of section 383 of EPCA, which
is that ``oil should be labeled on the basis of performance
characteristics and fitness for intended use, and not on the basis of
the origin of the oil.'' \3\
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\2\ 42 U.S.C. 6363 note.
\3\ See Legislative History Pub. L. 96-463, U.S. Code Cong. and
Adm. News, pp. 4354-4356 (1980).
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Accordingly, on April 8, 1981, the Commission published a notice
announcing the statutory suspension of the origin labeling requirements
of the Used Oil Rule. In the same notice, the Commission suspended
enforcement of those portions of the Used Oil Rule requiring that
advertising and promotional material disclose the origin of lubricants
made from used oil.\4\
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\4\ 46 FR 20979.
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The purposes of the recycled oil section of EPCA are to encourage
the recycling of used oil, to promote the use of recycled oil, to
reduce consumption of new oil by promoting increased utilization of
recycled oil, and to reduce environmental hazards and wasteful
practices associated with the disposal of used oil.\5\ To achieve these
goals, section 383 of EPCA directs the National Institute of Standards
and Technology (``NIST'') to develop test procedures for the
determination of the substantial
[[Page 39102]]
equivalency of re-refined or otherwise processed used oil or blend of
oil (consisting of such re-refined or otherwise processed used oil and
new oil or additives) with new oil distributed for a particular end use
and to report such test procedures to the Commission.\6\ Within 90 days
after receiving such report from NIST, the Commission is required to
prescribe, by rule, the substantial equivalency test procedures, as
well as labeling standards applicable to containers of recycled oil.\7\
EPCA further requires that the Commission's rule permit any container
of processed used oil to bear a label indicating any particular end
use, such as for use as engine lubricating oil, so long as a
determination of ``substantial equivalency'' with new oil has been made
in accordance with the test procedures prescribed by the Commission.\8\
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\5\ 42 U.S.C. 6363(a).
\6\ 42 U.S.C. 6363(c).
\7\ 42 U.S.C. 6363(d).
\8\ 42 U.S.C. 6363(d)(1)(B).
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On July 27, 1995, NIST reported to the Commission test procedures
for determining the substantial equivalency of re-refined or otherwise
processed used engine oils with new engine oils. Accordingly, to
implement EPCA's statutory directive, on October 31, 1995, the
Commission issued a rule (covering recycled engine oil) entitled Test
Procedures and Labeling Standards for Recycled Oil (``Recycled Oil
Rule''), 16 CFR part 311.\9\ The Recycled Oil Rule adopts the test
procedures developed by NIST, and allows (although it does not require)
a manufacturer to represent on a recycled engine-oil container label
that the oil is substantially equivalent to new engine oil, as long as
the determination of equivalency is based on the NIST test procedures.
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\9\ 60 FR 55414 (Oct. 31, 1995).
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The EPCA further provides that once the Recycled Oil Rule becomes
final, no Commission order or rule, and no law, regulation, or order of
any State (or political subdivision thereof), may remain in effect if
it has labeling requirements with respect to the comparative
characteristics of recycled oil with new oil that are not identical to
the labels permitted by this rule.\10\ Also, no rule or order of the
Commission may require any container of recycled oil to also bear a
label containing any term, phrase, or description connoting less than
substantial equivalency of such recycled oil with new oil.\11\
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\10\ 42 U.S.C. 6363(e)(1).
\11\ 42 U.S.C. 6363(e)(2).
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Under EPCA, the Recycled Oil Rule preempts the Used Oil Rule's
labeling and advertising requirements for engine oils. For non-engine
oils, the Used Oil Rule's labeling disclosure provisions continue to be
subject to the Congressional stay, and the advertising disclosure
provisions continue to be subject to the Commission's stay. The only
part of the Used Oil Rule not affected by the stays is that section
which prohibits the deceptive use of the term ``re-refined.'' In light
of the ongoing stays, when the Commission published the Recycled Oil
Rule in October 1995, it stated that, as part of its regulatory review
process, it would consider the continuing need for the Used Oil
Rule.\12\
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\12\ 60 FR 55414, 55417.
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Based on the foregoing, on April 3, 1996, the Commission published
an Advance Notice of Proposed Rulemaking (``ANPR'') stating that it had
tentatively determined that a separate Used Oil Rule is no longer
necessary, and seeking comments on the proposed repeal of the Rule.\13\
In accordance with section 18 of the FTC Act, 15 U.S.C. 57a, the ANPR
was sent to the Chairman of the Committee on Commerce, Science, and
Transportation, United States Senate, and the Chairman of the Committee
on Commerce, United States House of Representatives.
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\13\ 61 FR 14686.
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The ANPR comment period closed on May 3, 1996. The Commission
received one comment in response to the ANPR.\14\ The comment was
submitted by the Safety-Kleen Corporation (``Safety-Kleen''), a re-
refiner of used oil. Safety-Kleen supports repeal of the Commission's
Used Oil Rule, stating that it has been superseded effectively in the
marketplace by the FTC's Recycled Oil Rule.\15\
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\14\ The comment submitted in response to the ANPR has been
placed on the public record, Commission Rulemaking Record No.
R511959, and is coded ``D'' indicating that it is a public comment.
In this notice, the comment is cited by identifying the commenter
(by abbreviation), the comment number, and the relevant page number.
\15\ Safety-Kleen, D-1, 1.
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Accordingly, after reviewing the comment submitted, and in light of
promulgation of the Recycled Oil Rule, the Commission has determined
that to eliminate unnecessary duplication, and any inconsistency with
EPCA's goals, a separate Used Oil Rule is no longer necessary.\16\ The
Commission, therefore, seeks comments on the proposed repeal of the
Used Oil Rule.
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\16\ Repealing the Used Oil Rule would eliminate the
Commission's ability to obtain civil penalties for any future
misrepresentations of the re-refined quality of oil. Nevertheless,
the Commission has tentatively determined that repealing the Rule
would not seriously jeopardize the Commission's ability to act
effectively. The Recycled Oil Rule defines re-refined oil to mean
used oil from which physical and chemical contaminants acquired
through use have been removed. Although this Rule does not further
address re-refined oil or provide penalties for misrepresenting used
oil as ``re-refined,'' it defines for the public how the Commission
interprets this term. Any significant problems that may arise could
be addressed on a case-by-case basis, administratively under section
5 of the FTC Act, 15 U.S.C. 45, or through section 13(b) actions, 15
U.S.C. 53(b), filed in federal district court. Prosecuting serious
misrepresentations in district court allows the Commission to obtain
injunctive relief as well as equitable remedies, such as redress or
disgorgement.
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III. Rulemaking Procedures
The Commission finds that the public interest will be served by
using expedited procedures in this proceeding. First, there do not
appear to be any material issues of disputed fact to resolve in
determining whether to repeal the Rule. Second, the use of expedited
procedures will support the Commission's goal of eliminating obsolete
or unnecessary regulations without an undue expenditure of resources,
while ensuring that the public has an opportunity to submit data, views
and arguments on whether the Commission should repeal the Rule.
The Commission, therefore, has determined, pursuant to 16 CFR 1.20,
to use the procedures set forth in this notice. These procedures
include: (1) Publishing this Notice of Proposed Rulemaking; (2)
soliciting written comments on the Commission's proposal to repeal the
Rule; (3) holding an informal hearing, if requested by interested
parties; (4) obtaining a final recommendation from staff; and (5)
announcing final Commission action in a notice published in the Federal
Register.
IV. Invitation To Comment and Questions for Comment
Interested persons are requested to submit written data, views or
arguments on any issue of fact, law or policy they believe may be
relevant to the Commission's decision on whether to repeal the Rule.
The Commission requests that commenters provide representative factual
data in support of their comments. Individual firms' experiences are
relevant to the extent they typify industry experience in general or
the experience of similar-sized firms. Commenters opposing the proposed
repeal of the Rule should explain the reasons they believe the Rule is
still needed and, if appropriate, suggest specific alternatives.
Proposals for alternative requirements should include reasons and data
that indicate why the alternatives would better protect consumers from
unfair or
[[Page 39103]]
deceptive acts or practices under section 5 of the FTC Act, 15 U.S.C.
45.
Although the Commission welcomes comments on any aspect of the
proposed repeal of the Rule, the Commission is particularly interested
in comments on questions and issues raised in this Notice. All written
comments should state clearly the question or issue that the commenter
is addressing.
Before taking final action, the Commission will consider all
written comments timely submitted to the Secretary of the Commission
and testimony given on the record at any hearings scheduled in response
to requests to testify. Written 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. to 5 p.m. at the Federal Trade
Commission, Public Reference Room, Room H-130, Federal Trade
Commission, Sixth Street and Pennsylvania Avenue, NW., Washington, DC
20580, telephone number (202) 326-2222.
Questions
(1) Should the Used Oil Rule be kept in effect, or should it be
repealed?
(2) What benefits do consumers derive from the Rule?
(3) How would repealing the Rule affect the benefits experienced by
consumers?
(4) How would repealing the Rule affect the benefits and burdens
experienced by firms subject to the Rule's requirements?
(5) Is misrepresentation of used oil as ``re-refined'' a
significant problem in the marketplace?
(6) Are there any other federal, state, or local laws or
regulations, or private industry standards, that eliminate the need for
the Rule?
(7) Is the Commission's Recycled Oil Rule likely to provide all or
most of the benefits now provided by the Used Oil Rule?
V. Requests for Public Hearings
Because there does not appear to be any dispute as to the material
facts or issues raised by this proceeding and because written comments
appear adequate to present the views of all interested parties, a
public hearing has not been scheduled. If any person would like to
present testimony at a public hearing, he or she should follow the
procedures set forth in the DATES and ADDRESS sections of this notice.
VI. Preliminary Regulatory Analysis
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-12, requires
an analysis of the anticipated impact of the proposed repeal of the
Rule on small businesses.\17\ The analysis must contain, as applicable,
a description of the reasons why action is being considered, the
objectives of and legal basis for the proposed action, the class and
number of small entities affected, the projected reporting,
recordkeeping and other compliance requirements being proposed, any
existing federal rules which may duplicate, overlap or conflict with
the proposed action, and any significant alternatives to the proposed
action that accomplish its objectives and, at the same time, minimize
its impact on small entities.
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\17\ Section 22 of the FTC Act, 15 U.S.C. 57b-3, also requires
the Commission to issue a preliminary regulatory analysis relating
to proposed rules when the Commission publishes a notice of proposed
rulemaking. The Commission has determined that a preliminary
regulatory analysis is not required by section 22 in this proceeding
because the Commission has no reason to believe that repeal of the
Rule: (1) Will have an annual effect on the national economy of
$100,000,000 or more; (2) will cause a substantial change in the
cost or price of goods or services that are used extensively by
particular industries, that are supplied extensively in particular
geographical regions, or that are acquired in significant quantities
by the Federal Government, or by State or local governments; or (3)
otherwise will have a significant impact upon persons subject to the
Rule or upon consumers.
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A description of the reasons why action is being considered and the
objectives of the proposed repeal of the Rule have been explained
elsewhere in this Notice. Repeal of the Rule would appear to have
little or no effect on any small business. The Commission is not aware
of any existing federal laws or regulations that would conflict with
repeal of the Rule.
For these reasons, the Commission certifies, pursuant to section
605 of RFA, 5 U.S.C. 605, that if the Commission determines to repeal
the Rule that action will not have a significant impact on a
substantial number of small entities. To ensure that no substantial
economic impact is being overlooked, however, the Commission requests
comments on this issue. After reviewing any comments received, the
Commission will determine whether it is necessary to prepare a final
regulatory flexibility analysis.
VII. Paperwork Reduction Act
The Used Oil Rule imposes third-party disclosure requirements that
constitute ``information collection requirements'' under the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq. On October 15, 1980, however, the
Used Oil Recycling Act suspended the provision of the Used Oil Rule
requiring labels to disclose the origin of lubricants made from used
oil,\18\ until the Commission issued rules under EPCA. Further, on
April 8, 1981, the Commission published a notice announcing the
statutory suspension of the origin labeling requirements of the Used
Oil Rule. In the same notice, the Commission suspended enforcement of
those portions of the Used Oil Rule requiring that advertising and
promotional material disclose the origin of lubricants made from used
oil.\19\ Since 1981, therefore, the Rule effectively has imposed no
paperwork burdens on marketers of used lubricating oil. In any event,
repeal of the Used Oil Rule would permanently eliminate any burdens on
the public imposed by these disclosure requirements.
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\18\ 42 U.S.C. 6363 note.
\19\ 46 FR 20979.
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VIII. Additional Information For Interested Persons
A. Motions or Petitions
Any motions or petitions in connection with this proceeding must be
filed with the Secretary of the Commission.
B. Communications by Outside Parties to Commissioners or Their
Advisors.
Pursuant to Rule 1.18(c) of the Commission's rules of practice, 16
CFR 1.18(c), communications with respect to the merits of this
proceeding from any outside party to any Commissioner or Commissioner's
advisor during the course of this rulemaking shall be subject to the
following treatment. Written communications, including written
communications from members of Congress, shall be forwarded promptly to
the Secretary for placement on the public record. Oral communications,
not including oral communications from members of Congress, are
permitted only when such oral communications are transcribed verbatim
or summarized at the discretion of the Commissioner or Commissioner's
advisor to whom such oral communications are made, and are promptly
placed on the public record, together with any written communications
relating to such oral communications. Memoranda prepared by a
Commissioner or Commissioner's advisor setting forth the contents of
any oral communications from members of Congress shall be placed
promptly on the public record. If the communication with a member of
Congress is transcribed verbatim or summarized, the
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transcript or summary will be placed promptly on the public record.
Authority: 15 U.S.C. 41-58.
List of Subjects in 16 CFR Part 406
Advertising, Labeling, Trade practices, Used lubricating oil.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-19009 Filed 7-25-96; 8:45 am]
BILLING CODE 6750-01-M