[Federal Register Volume 63, Number 226 (Tuesday, November 24, 1998)]
[Proposed Rules]
[Pages 64921-64930]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31202]


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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: Request for public comments on proposed conditional exemption.

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SUMMARY: The Federal Trade Commission (``the Commission'') proposes 
granting manufacturers of residential appliances covered by its 
Appliance Labeling Rule (``the Rule'') a conditional exemption from the 
Rule's prohibition against the inclusion of non-required information on 
the EnergyGuide labels required by the Rule. The exemption would permit 
appliance manufacturers to place the logo of the Department of Energy's 
(``DOE'') and Environmental Protection Agency's (``EPA'') joint 
``ENERGY STAR'' Program on required EnergyGuides on certain appliances 
under specific conditions. The Commission seeks comment on its proposal 
to grant this conditional exemption. The Commission also proposes a 
non-substantive amendment to the Rule to include ``Federal Trade 
Commission'' on all EnergyGuide labels so consumers and others will be 
clear as to the identity of the agency with the authority to enforce 
the Rule.

DATES: Written comments will be accepted until January 8, 1999.

ADDRESSES: Written comments should be directed to: Secretary, Federal 
Trade Commission, Room H-159, Sixth St. and Pennsylvania Ave., NW, 
Washington, D.C. 20580. Comments about this conditional exemption to 
the Appliance Labeling Rule should be identified as: ``Conditional 
exemption for ENERGY STAR, 16 CFR Part 305--Comment.''

FOR FURTHER INFORMATION CONTACT: James Mills, Attorney, Division of 
Enforcement, Rm 4616, Federal Trade Commission, Washington, D.C. 20580 
(202-326-3035).

SUPPLEMENTARY INFORMATION:

I. Background

A. The Commission's Appliance Labeling Rule

    The Commission issued the Appliance Labeling Rule, 44 FR 66466 
(Nov. 19, 1979), pursuant to a directive in section 324 of the Energy 
Policy and Conservation Act of 1975 (42 U.S.C. 6294 (``EPCA'')). The 
Rule requires manufacturers to disclose energy information about 
certain major household appliances (``covered appliances'') to enable 
consumers purchasing appliances to compare the energy use or efficiency 
of competing models. The Rule initially applied to eight appliance 
categories: refrigerators, refrigerator-freezers, freezers, 
dishwashers, water heaters, clothes washers, room air conditioners, and 
furnaces. Subsequently, the Commission expanded the Rule's coverage 
five times: in 1987 (central air conditioners, heat pumps, and certain 
new types of furnaces); 1989 (fluorescent lamp ballasts); 1993 (certain 
plumbing products); and twice in 1994 (certain lighting products, and 
pool heaters and certain other types of water heaters).

[[Page 64922]]

    Manufacturers of all covered appliances must disclose specific 
energy consumption or efficiency information at the point of sale in 
the form of an EnergyGuide label that is affixed to the covered 
product.1 Manufacturers must derive this information from 
standardized tests that EPCA directs DOE to develop.2 
Required labels for appliances and required fact sheets for heating and 
cooling equipment must include an energy consumption or efficiency 
disclosure and a ``range of comparability'' that shows the highest and 
lowest energy consumption or efficiencies for all similar appliance 
models. Labels for refrigerators, refrigerator-freezers, freezers, 
clothes washers, dishwashers, water heaters, and room air conditioners 
also must contain a secondary disclosure of estimated annual operating 
cost based on a specified national average cost for the fuel the 
appliances use. The Rule prescribes specifications for the size and 
colors of the EnergyGuides and for the size and style of the type to be 
used in the required disclosures. Sample labels appear as appendices to 
the Rule. The Rule also prohibits the inclusion of non-required 
information on the EnergyGuide to ensure that such information does not 
detract from the required information:

    \1\ The information on the EnergyGuide also must appear in 
catalogs from which covered products can be ordered. Manufacturers 
of furnaces, central air conditioners, and heat pumps also must 
either provide fact sheets showing additional cost information or be 
listed in an industry directory that shows the cost information for 
their products.
    \2\ Section 323 of EPCA (42 U.S.C. 6293) directs DOE to develop 
test procedures to be used by appliance manufactures to determine 
their products' compliance with DOE's standards. Section 
324(c)(1)(A) of EPCA (42 U.S.C. 6294(c)(1)(A)) states that the 
Commission's Rule must require disclosure on labels of energy use 
information derived from the DOE test procedures.
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    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. * * * 
3

    \3\ The language in this section pertains to labels for 
refrigerators, refrigerator-freezers, freezers, dishwashers, clothes 
washers, water heaters, and room air conditioners. 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 and heat pumps, 16 CFR 305.11(a)(5)(iii)(H)(1). The 
statute itself (EPCA) does not prohibit the inclusion of non-Rule-
required information on the Energy Guide.
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16 CFR 305.11(a)(5)(i)(K).
    DOE and EPA staff (informally) and an appliance manufacturer (the 
Maytag Company) have requested that the Commission grant a conditional 
exemption from this prohibition against non-required information that 
would allow the placement of the DOE/EPA ENERGY STAR logo on the 
EnergyGuides on qualifying appliances.

B. The ENERGY STAR Program

1. Description of the Program
    Section 127 of the Energy Policy Act of 1992 4 directed 
DOE, in conjunction with EPA, utilities, and appliance manufacturers, 
to submit a report to the Congress assessing the potential for the 
development and commercialization of appliances that are substantially 
more efficient than required by state or federal law,5 and 
that are likely to be cost-effective for consumers. The appliances 
contemplated in the directive include those covered by the Commission's 
Appliance Labeling Rule. The report, which DOE submitted to Congress in 
April, 1995, concluded in part that the involvement of the federal 
government in ``market transformation'' programs could have a positive 
effect on consumer purchasing decisions regarding higher efficiency 
products.
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    \4\ Pub. L. No. 102-486, 106 Stat. 2776, 2835 (Oct. 24, 1992).
    \5\ In this context, ``federal law'' includes DOE's minimum 
efficiency standards for appliances, which Congress directed DOE to 
issue in section 325 of EPCA (42 U.S.C. 6295). As amended, the 
statute itself set the initial national energy efficiency standards 
for appliances and established a schedule for regular DOE review of 
the standards for each product category. The statute directed DOE to 
design these standards to achieve the maximum improvement in energy 
efficiency for residential appliances that is technologically 
feasible and economically justified. 42 U.S.C. 6265(o)(2). In 
accordance with the statutory directive, DOE regularly reviews the 
established standards and publishes new standards where appropriate. 
DOE's rules relating to standards, like its test procedure rules, 
are codified at 10 CFR Part 430 (1997).
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    Following the report, DOE began to develop a program--originally 
called the ENERGY SAVER Program--to promote high efficiency household 
appliances and water heaters in the U.S. marketplace. Concurrently, EPA 
was developing a similar program--the ENERGY STAR Program--in response 
to a directive in section 103(g) of the Clean Air Act, 42 U.S.C. 
7403(g), that encompassed home heating and cooling equipment (``HVAC 
equipment''). EPA also has developed ENERGY STAR Programs for lighting 
products, consumer electronics, office equipment, and home insulation 
products. Ultimately, the two programs for appliances and HVAC 
equipment were merged into a single program under the ENERGY STAR name. 
An ENERGY STAR logo can be used by Program participants in connection 
with qualifying products directly on the product itself or on an ENERGY 
STAR label or fact sheet associated with or attached to the product or 
used in promotional materials or advertising. The logo indicates 
significantly better energy performance than some specified norm (DOE's 
minimum efficiency standards, in the case of appliances and HVAC 
equipment), or indicates the incorporation of a specific energy saving 
feature on the product.
    The Program is a partnership among DOE, EPA, product manufacturers, 
major national, regional, and local retailers, utilities, state energy 
offices, industry trade associations and the financial community. The 
Program's intent is to increase consumer interest in purchasing highly 
efficient appliances and heating and cooling equipment (as well as 
other building products) through promotional programs (including 
national and regional advertising), lower interest financing, product 
labeling, sales training, and consumer education.
    The appliance products that are (or will be) included in DOE's 
component of the Program are: refrigerator-freezers, dishwashers, 
clothes washers, room air conditioners, and water heaters. HVAC 
equipment has been included since 1995 in EPA's earlier version of the 
ENERGY STAR Program, and there is already a mechanism in place for 
designating qualifying HVAC products by means of separate labels, as 
well as in advertising and promotional materials. EPA staff is joining 
in the instant request for Commission permission for the HVAC equipment 
manufacturers participating in the Program to include the ENERGY STAR 
logo on the EnergyGuides on their qualifying products.
    DOE and EPA have established qualifying energy consumption criteria 
that specific appliance and HVAC equipment categories must meet to be 
included in the ENERGY STAR Program.6 To establish its 
criteria, DOE held public workshops in several cities, and solicited 
comments from all segments of the public. DOE received comments from 
appliance manufacturers and retailers, utilities, state energy 
agencies, public interest groups, and representatives of the Canadian 
government.
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    \6\ A discussion of DOE's criteria, together with lists of 
qualifying products, can be found on DOE's ENERGY STAR website, at 
. EPA maintains a similar website at 
, which is hyperlinked to DOE's site.
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    EPA held approximately 30 public meetings, primarily at EPA 
Headquarters in Washington, DC, mostly in late 1995 and early 1996.

[[Page 64923]]

Attending stakeholders included manufacturers, public interest groups, 
industry trade associations, and utility groups.
    The results of these processes as they apply to specific appliance 
categories are summarized below:
    To be included in the Program:
    A refrigerator-freezer must have an annual electrical consumption 
(as determined by the DOE test for that category of products) that is 
at least 20 percent less than the maximum energy consumption permitted 
by DOE's standard for refrigerator-freezers;
    A dishwasher must have an Energy Factor (``EF'') of 0.52 or 
greater.7 An EF of 0.52 represents a 13% improvement in 
efficiency over DOE's minimum EF of 0.46;
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    \7\ Under the DOE tests, an appliance's EF is a measure of the 
useful output of its services divided by the energy input.
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    A standard clothes washer (top or front loading) must have an EF of 
2.5 or greater.8 An EF of 2.5 is an approximately 112% 
efficiency improvement over DOE's minimum EF of 1.18. The relatively 
high percentage of improvement over the standard is due to the 
existence of a new technology in the clothes washer industry;
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    \8\ To date, DOE has included only ``standard'' clothes washers 
in the Program because most of the models sold fall within that 
subcategory. For purposes of its minimum efficiency standards 
program, DOE's clothes washer category also includes a ``compact'' 
subcategory. The criterion for the distinction is tub capacity.
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    A room air conditioner must be rated with an Energy Efficiency 
Ratio (``EER'') that is 15% greater than the DOE minimum EER for the 
type and size of that unit.9
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    \9\ The EER is the efficiency measurement for room air 
conditioners specified in the DOE test procedure for these products. 
Only units without reverse cycle (heating function) and with 
louvered sides can currently qualify for the Program.
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    A gas- or oil-fueled furnace must be rated with an Annual Fuel 
Utilization Efficiency (``AFUE'') that is 90 or better; a gas- or oil-
fueled boiler must be rated with an AFUE that is 85 or 
better.10
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    \10\ The AFUE is the efficiency measurement for forced air 
furnaces and for boilers that is specified in the DOE test procedure 
for these products.
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    A central air conditioner or the cooling function of an air-source 
heat pump must be rated with a Seasonal Energy Efficiency Ratio 
(``SEER'') of 12 or better; the heating function of an air-source heat 
pump must be rated with a Heating Seasonal Performance Factor 
(``HSPF'') of 7 or higher.11
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    \11\ The SEER is the efficiency measurements for central air 
conditioners and the cooling function of air-source heat pumps 
specified in the DOE test procedure for these products; the HSPF is 
the DOE test efficiency measurement for the heating function of air-
source heat pumps.
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    To date, DOE has not finished developing the water heater component 
of the Program.
    As discussed in section II., below, the conditional exemption from 
the Rule's non-required information prohibition would be granted to 
Program participants for those appliances that meet DOE's and EPA's 
criteria.
2. The ENERGY STAR Logo
    EPA owns the ENERGY STAR logo and name and has licensed them to 
DOE. As a result of this joint partnership, the initials of both 
agencies appear on the logo. DOE and EPA allow the use of the ENERGY 
STAR logo by retailers, utilities, manufacturers and other 
organizations participating in their respective programs under clearly 
established guidelines that are set out in a memorandum of 
understanding (``MOU'') that each participant must sign. Participants 
that have signed an MOU are then ``partners.'' Under these MOUs, 
partners may associate the ENERGY STAR logo and name with specific 
products that DOE and EPA have determined meet the Program's 
requirements.12
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    \12\ The MOUs provide that each partner is responsible for using 
the logo in accordance with the terms of the MOU. Partners must make 
the logo use guidelines available to other entities, such as 
advertising agencies, that prepare materials on the partner's 
behalf. Non-partners must seek specific approval from either EPA or 
DOE for each specific use of the logo. Under no circumstances may 
the logo or name be used in a manner that would imply EPA or DOE 
endorsement. DOE and EPA are responsible for overseeing proper use 
of the logo and name.
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    Program partners may use the logo as a product label and in 
catalogs and advertising to designate specific products that are ENERGY 
STAR qualifying products. A sample EnergyGuide with an ENERGY STAR logo 
placed in accordance with the conditions the Commission is proposing 
appears at the end of Section II., below. Partners also may display the 
logo when describing one or more of the ENERGY STAR labeling programs, 
such as in special educational brochures, newsletters, or annual 
reports. Retailer and utility partners are allowed to include the logo 
in general educational or promotional materials, such as utility bill 
stuffers, newsletters, or annual reports.
3. The Request for a Conditional Exemption
    DOE staff has conducted an inquiry into the appliance manufacturing 
and marketing industry's receptivity to the use of the ENERGY STAR logo 
on the EnergyGuides required on appliances. According to DOE staff, the 
conditional exemption they and Maytag have requested would result in a 
single, combined label (an ``augmented'' EnergyGuide) that would be 
preferable to separate EnergyGuide and ENERGY STAR labels for several 
reasons.
    Currently, retailers apply separate ENERGY STAR labels on 
qualifying appliances at each store site. The extent and accuracy of 
label placement is then monitored by participating utilities and DOE 
contractors. From its public workshops and the comments they generated, 
DOE has learned that many manufacturers, retailers and consumers would 
prefer a single, augmented label. Some manufacturers favor an augmented 
label because it would reduce their costs. In addition, Maytag stated 
that the augmented EnergyGuide would allow manufacturers ``to assure 
proper identification of qualifying models, [which] is not as easily 
controlled at the retailer level.'' According to DOE, retailers believe 
that the augmented label would be less confusing to consumers than 
multiple labels relating to energy use, that an augmented EnergyGuide 
label could build upon the broad ``brand recognition'' achieved by the 
Commission's label, and that an augmented label would make it easier 
for consumers to distinguish efficient products. DOE staff believe that 
the efforts of the Commission, EPA, and DOE to provide consumer 
educational materials explaining a new augmented label, coupled with 
training for appliance salespeople, would lead to broader overall 
consumer awareness of the differences in energy consumption among 
competing appliances, and thus would result in more informed consumer 
decision-making. DOE staff also has suggested that the augmented label 
could be used by utilities in connection with their efforts to support 
demand-side load reduction objectives through the use of incentives to 
consumers.

II. Discussion

A. The Commission's Basis for Proposing a Conditional Exemption

    The Commission believes that a conditional exemption to allow 
manufacturers to place the ENERGY STAR logo on EnergyGuides affixed to 
qualified products is appropriate for the reasons advanced in favor of 
the augmented EnergyGuide in the discussion at I.B.3., above. Although 
the ENERGY STAR logo can be affixed to appliances as a separate label 
without the conditional exemption to the Rule, and is in fact already 
appearing on some qualifying appliances and most

[[Page 64924]]

qualifying HVAC equipment covered by the Rule, the Commission agrees 
with DOE staff and Maytag that an augmented label is likely to reduce 
manufacturers' labeling and monitoring costs. Use of an augmented label 
may also reduce the likelihood of mislabeling. The logo's highlighting 
of efficient appliances would complement the Rule's objective of 
providing consumers with energy efficiency and consumption information 
to enable them to consider these factors when purchasing appliances. To 
the extent that consumers are unfamiliar with the meaning of the ENERGY 
STAR logo, its placement in close conjunction with the descriptive 
information already on the EnergyGuide label may provide a context that 
better ensures consumer understanding of the logo than if it were 
physically separated from that information. In addition, the ENERGY 
STAR logo, and the brief explanatory message that the Commission 
proposes accompany it (see discussion in II.B., below), also may 
enhance consumer understanding of the energy efficiency information 
that already appears on the EnergyGuide. Finally, the augmented label 
may contribute to the overall aim of conserving energy that underlies 
EPCA, the statutory basis for both the EnergyGuide and DOE's component 
of the ENERGY STAR Program.

B. The Terms of the Proposed Conditional Exemption

    The Commission is proposing to grant those manufacturers 
participating in the ENERGY STAR Program a conditional exemption from 
the Rule's prohibition against placing ``information other than that 
specified'' by the Rule on the EnergyGuides they attach to qualifying 
products.13 The Commission would base this exemption on 
several conditions. First, the ENERGY STAR logo would be permitted on 
the EnergyGuides of only those covered appliances and HVAC equipment 
that meet the ENERGY STAR Program qualification criteria that are 
current at the time the products are labeled. Second, only 
manufacturers that have signed a MOU with DOE or EPA would be permitted 
to affix the augmented labels to qualifying appliances. Third, to 
ensure that the ENERGY STAR logo is permanently placed in the proper 
position on the augmented EnergyGuide label, manufacturers that choose 
to avail themselves of the conditional exemption would be required to 
print the ENERGY STAR logo on EnergyGuides for qualified products as 
part of the usual label printing process; that is, manufacturers (or 
distributors or retailers) would not be permitted to apply a separate 
logo onto already finished labels subsequent to the time a product is 
labeled. Fourth, manufacturers would have to draft the logo in 
conformance with certain technical specifications relating to its 
appearance, placement on the EnergyGuide, and size. Specifically, the 
logo would have to appear above the comparability bar in the box that 
contains the applicable range of comparability. The precise location of 
the logo would vary depending on where the caret indicating the 
position of the labeled model on the scale appears (see the sample 
label). The required dimensions of the logo would be no more than one 
and one-eighth inches (3 cm.) in width and no more than three-quarters 
of an inch (2 cm.) in height. Manufacturers would be prohibited from 
placing the logo in a way that would obscure, detract from, alter the 
dimensions of, or touch any element of the label, which in all other 
respects would have to conform to the requirements of the Commission's 
Rule. The ENERGY STAR logo would be in process black ink to match the 
print specifications for the EnergyGuide. The background would remain 
in process yellow to match the rest of the label.
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    \13\ For the information and convenience of those covered by the 
Rule who may wish to avail themselves of the exemption, the 
Commission also proposes adding a new section to the Rule--305.19 
Exemptions. This section would codify the conditional exemption 
proposed today and provide a section for codification of any future 
exemptions.
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    Finally, the Commission also proposes requiring that manufacturers 
availing themselves of the conditional exemption add a sentence that 
explains the significance of the ENERGY STAR logo. Although DOE and EPA 
have made, and continue to make, a significant effort to disseminate 
information concerning the Program in general and the meaning of the 
logo specifically, the Commission is concerned that the addition of the 
logo to the EnergyGuide without some explanation of its meaning on the 
face of the label itself may not be meaningful to consumers. Because 
space is at a premium on the EnergyGuide, the Commission proposes that 
manufacturers include a brief explanatory sentence below the 
comparability bar between the ``least'' and ``most'' numbers in eight-
point Helvetica Cond. Black typeface: ``ENERGY STAR [product type(s)] 
use at least ____% less energy annually than the Federal Maximum.'' or: 
``ENERGY STAR [product type(s)] are at least ____% more efficient than 
the Federal Minimum.'' or: ``ENERGY STAR [product type(s)] must be 
rated with a [type of efficiency rating] of [rating] or higher.'' The 
specific wording of this statement would depend on the product 
category.
    Thus, the text on a label for a qualifying refrigerator-freezer 
would read:

ENERGY STAR refrigerators use at least 20% less energy annually than 
the Federal Maximum.

    Or, the text on a label for a qualifying dishwasher would read:

ENERGY STAR dishwashers are at least 13% more efficient than the 
Federal Minimum.

    Or, the text on a label for a qualifying central air conditioner 
would read:

ENERGY STAR central air conditioners must be rated with a SEER of 12 or 
higher.14

    \14\ The ``SEER'' descriptor (``seasonal energy efficiency 
ratio'') is defined on the EnergyGuide as ``* * * the measure of 
energy efficiency for central air conditioners.'' The label also 
states: ``Central air conditioners with higher SEERs are more energy 
efficient.''
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    In addition to proposing the conditional exemption, the Commission 
proposes amending the Rule so the Federal Trade Commission is clearly 
identified as the government entity that requires manufacturers to 
affix the label to their appliances. This amendment would eliminate 
confusion if the Commission grants the proposed conditional exemption 
and the identifying initials of DOE and EPA appear on the labels of 
appliances that qualify for the ENERGY STAR Program. The proposal would 
be to change the sentence at the bottom of the EnergyGuide to read:

Important: Removal of this label before consumer purchase violates the 
Federal Trade Commission's Appliance Labeling Rule (16 CFR Part 
305).15

    \15\ Currently, this disclosure reads, ``Important: Removal of 
this label before consumer purchase is a violation of Federal law 
(42 U.S.C. 6302).''
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    Because of the non-substantive nature of this proposal, 
manufacturers would not have to make the change until their supply of 
current labels is exhausted or they draft new labels for other reasons, 
such as a change in the ranges of comparability. The proposed language 
is included on the sample EnergyGuide.

Sample EnergyGuide with ENERGY STAR Logo:

BILLING CODE 6750-01-P

[[Page 64925]]

[GRAPHIC] [TIFF OMITTED] TP24NO98.000



BILLING CODE 6750-01-C

[[Page 64926]]

III. Request for Comment

A. General Information for Commenters

    The Commission requests interested persons to submit written 
comments on any issue of fact, law or policy that may bear upon the 
proposed conditional exemption. Although the Commission welcomes 
comments on any aspect of the proposed conditional exemption, the 
Commission is particularly interested in comments on the questions 
listed below. All written comments should state clearly the question or 
issue, or the specific condition, that the commenter wishes to address.
    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. Comments opposing 
the proposed conditional exemption or any individual condition should, 
if possible, suggest specific alternatives. Proposals for alternative 
conditions should include reasons and data that indicate why the 
alternatives would better serve the requirements of the Appliance 
Labeling Rule. Comments should be supported by a full discussion of all 
the relevant facts and/or be based on firsthand knowledge, personal 
experience, or general understanding of the particular issues 
addressed.
    The request from Maytag and 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 from 8:30 a.m. to 5:00 p.m. at the Federal Trade 
Commission, 6th St. and Pennsylvania Ave., N.W., Room 130, Washington, 
D.C. 20580.

B. Questions for Comment

    Members of the public are invited to comment on any issues or 
concerns they believe are relevant or appropriate to the Commission's 
consideration of the proposed exemption from the Rule's prohibition 
against the inclusion of non-required information on EnergyGuides for 
those manufacturers in DOE/EPA's ENERGY STAR Program that wish to 
identify products that qualify for inclusion in the Program. The 
exemption would be conditioned on placement, by such manufacturers, of 
the DOE/EPA ENERGY STAR logo and explanatory statement on the 
EnergyGuides affixed to the qualifying products in the manner and form 
detailed in the discussion in Section II.B., above.
    The Commission is particularly interested in comments addressing 
the following questions and issues:
    1. Are the conditions under which the Commission proposes the 
exemption, including the size and placement of the logo on the 
EnergyGuide, appropriate? Are there additional, or different, 
conditions that also would be appropriate?
    2. Should the exemption be limited to manufacturers who are 
``partners'' in the ENERGY STAR program, or should it include non-
partners who have obtained specific approval from either DOE or EPA for 
a particular use of the ENERGY STAR logo?
    3. What is the most cost-effective method (e.g., requiring that 
manufacturers print the ENERGY STAR logo on EnergyGuides) of assuring 
that the ENERGY STAR logo will appear on EnergyGuides?
    4. a. Do consumers need the proposed explanatory statement to 
understand why the ENERGY STAR logo is on the EnergyGuide?
    b. Are there ways to word the statement, or ways to place the 
statement on the EnergyGuide, that would better explain the meaning of 
the ENERGY STAR logo?
    c. Would it be clearer to consumers that the proposed explanatory 
statement on the EnergyGuide label refers to the ENERGY STAR logo if 
the statement and the logo were both in a color of ink (for example, 
blue or green) that is different from the black ink on the rest of the 
EnergyGuide?
    d. How would the proposed explanatory statement affect consumer 
understanding of the other information on the EnergyGuide?
    5. What would be the economic impact on manufacturers of the 
proposed exemption and each of the proposed conditions for use of the 
exemption?
    6. What would be the benefits of the proposed conditional 
exemption? Who would receive those benefits?
    7. What would be the benefits and economic impact of the proposed 
exemption and each of the proposed conditions on small businesses?
    8. Do the ENERGY STAR logo and its promotional materials convey 
accurate information to consumers, especially with regard to the 
overall cost over time of purchasing and operating appliances that 
qualify for the ENERGY STAR logo versus those that do not?
    The Commission notes that the ENERGY STAR Program itself was 
developed by EPA and DOE and that the Commission does not have the 
authority to modify the terms of that Program. Thus, this proceeding is 
not an appropriate forum for comments concerning the ENERGY STAR 
Program, with the exception of comments responding specifically to 
question 8, above. This proceeding is limited to exploring the 
Commission's proposal to permit the inclusion of the ENERGY STAR logo 
on the EnergyGuides required by the Commission's Rule.

IV. Regulatory Flexibility Act

    This notice does not contain a regulatory analysis under the 
Regulatory Flexibility Act (``RFA''), 5 U.S.C. 603-604, because the 
Commission believes that the conditional exemption, if adopted, would 
not have ``a significant economic impact on a substantial number of 
small entities,'' 5 U.S.C. 605. The Rule prohibits the inclusion of 
non-required information on the EnergyGuide in order to ensure that 
such information does not detract from the required information. The 
conditional exemption would not impose any new requirements on 
manufacturers of appliances and HVAC equipment. Instead, it would allow 
them the option, under certain conditions, of voluntarily including the 
DOE/EPA ENERGY STAR logo on EnergyGuides affixed to products that 
qualify for inclusion in the ENERGY STAR Program. The Commission, 
therefore, believes that the impact of the conditional exemption on all 
entities within the affected industry, if any, would be de minimis.
    Similarly, manufacturers would not have to comply with the proposed 
amendment to require different language on the EnergyGuide that 
identifies the Commission as the agency with enforcement authority for 
the Rule until they were required to print new labels for other 
reasons, so the Commission believes that the impact of the proposed 
amendment on all entities within the affected industry, if any, would 
be de minimis.
    In light of the above, the Commission certifies, pursuant to 
section 605 of the RFA, 5 U.S.C. 605, that the proposed conditional 
exemption would not, if granted, have a significant impact on a 
substantial number of small entities. To ensure that no substantial 
economic impact is being overlooked, however, the Commission solicits 
comments concerning the effects of the proposed conditional exemption, 
including any benefits and burdens on manufacturers or consumers and 
the extent of those benefits and burdens, beyond those imposed or 
conferred by the current Rule, that the conditional exemption would 
have on manufacturers, retailers, or other sellers. The Commission is 
particularly interested in comments

[[Page 64927]]

regarding the effects of the conditional exemption on small businesses. 
After reviewing any comments received, the Commission will determine 
whether it is necessary to prepare a final regulatory flexibility 
analysis if it determines to grant the conditional exemption.

V. Paperwork Reduction Act

    The Paperwork Reduction Act (``PRA''), 44 U.S.C. 3501 et seq., 
requires government agencies, before promulgating rules or other 
regulations that require ``collections of information'' (i.e., 
recordkeeping, reporting, or third-party disclosure requirements), to 
obtain approval from the Office of Management and Budget (``OMB''), 44 
U.S.C. 3502. The Commission currently has OMB clearance for the Rule's 
information collection requirements (OMB No. 3084-0069). The 
conditional exemption would not impose any new information collection 
requirements. To ensure that no additional burden has been overlooked, 
however, the Commission seeks public comment on what, if any, 
additional information collection burden the proposed conditional 
exemption may impose.

VI. 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) (1997), 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 
and summaries of any oral communications relating to such oral 
communications. Oral communications from members of Congress shall be 
transcribed or summarized, at the discretion of the Commissioner or 
Commissioner's advisor to whom such oral communications are made, and 
promptly placed on the public record, together with any written 
communications and summaries of any oral communications relating to 
such oral communications.

List of Subjects in 16 CFR Part 305

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

    Authority: 42 U.S.C. 6294.

    In consideration of the foregoing, the Commission proposes to amend 
part 305 of title 16, chapter I, subchapter C of the Code of Federal 
Regulations, as follows:

PART 305--RULE CONCERNING DISCLOSURES REGARDING ENERGY CONSUMPTION 
AND WATER USE OF CERTAIN HOME APPLIANCE AND OTHER PRODUCTS REQUIRED 
UNDER THE ENERGY POLICY AND CONSERVATION ACT (``APPLIANCE LABELING 
RULE'')

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

    Authority: 42 U.S.C. 6294.

    2. Section 305.11(a)(5)(i)(I) is revised to read as follows:


Sec. 305.11  Labeling for covered products.

    (a) * * *
    (5) * * *
    (i) * * *
    (I) The following statement shall appear at the bottom of the 
label:

    Important: Removal of this label before consumer purchase 
violates the Federal Trade Commission's Appliance Labeling Rule (16 
CFR Part 305).
* * * * *
    3. Section 305.11(a)(5)(ii)(H) is revised to read as follows:


Sec. 305.11  Labeling for covered products.

    (a) * * *
    (5) * * *
    (ii) * * *
    (H) The following statement shall appear at the bottom of the 
label:

    Important: Removal of this label before consumer purchase 
violates the Federal Trade Commission's Appliance Labeling Rule (16 
CFR Part 305).
* * * * *
    4. Section 305.11(a)(5)(iii)(H) is revised to read as follows:


Sec. 305.11  Labeling for covered products.

    (a) * * *
    (5) * * *
    (iii) * * *
    (H) The following statement shall appear at the bottom of the 
label:

    Important: Removal of this label before consumer purchase 
violates the Federal Trade Commission's Appliance Labeling Rule (16 
CFR Part 305).

* * * * *
    5. Section 305.19 is added to read as follows:


Sec. 305.19  Exemptions.

    The Commission has exempted manufacturers, private labelers, 
distributors, and/or retailers in some instances from specific 
requirements of the Rule in this part. These exemptions are listed in 
this section. In some circumstances, use of the exemptions is 
conditioned on alternative performance by manufacturers, private 
labelers, distributors, and/or retailers.
    (a) Limited conditional exemption for manufacturers from the 
prohibition against the inclusion of non-required information on the 
label of covered products that qualify for inclusion in the ENERGY STAR 
Program maintained by the Department of Energy (``DOE'') and the 
Environmental Protection Agency (``EPA''). Those manufacturers 
participating in the DOE/EPA ENERGY STAR Program are granted a 
conditional exemption from the prohibition against placing 
``information other than that specified'' by the Rule on the 
EnergyGuides they attach to their qualifying products. This exemption 
is based on several conditions:
    (1) The ENERGY STAR logo is permitted on the EnergyGuides of only 
those covered products that meet the ENERGY STAR Program qualification 
criteria that are current at the time the products are labeled.
    (2) Only manufacturers that have signed a Memorandum of 
Understanding with DOE or EPA may add the ENERGY STAR logo to labels on 
qualifying covered products.
    (3) Manufacturers that choose to avail themselves of the 
conditional exemption must print the ENERGY STAR logo on EnergyGuides 
for qualified products as part of the usual label printing process; 
that is, manufacturers (or distributors or retailers) are not permitted 
to apply a separate logo onto already finished labels subsequent to the 
time a product is labeled.
    (4) Manufacturers must place the logo on the EnergyGuide above the 
comparability bar in the box that contains the applicable range of 
comparability. The precise location of the logo will vary depending on 
where the caret indicating the position of the labeled model on the 
scale appears (see sample label 10 in appendix L to this part). The 
required dimensions of the logo must be one and one-eighth inches (3 
cm.) in width and three-quarters of an inch (2 cm.) in height. 
Manufacturers are prohibited from placing the logo in a way that would 
obscure, detract from, alter the dimensions of, or touch any

[[Page 64928]]

element of the EnergyGuide, which in all other respects must conform to 
the requirements of this part. The ENERGY STAR logo must be in process 
black ink to match the print specifications for the EnergyGuide. The 
background must remain in process yellow to match the rest of the 
label.
    (5) Manufacturers must add a sentence that explains the 
significance of the ENERGY STAR logo below the comparability bar 
between the ``least'' and ``most'' numbers in eight-point Helvetica 
Cond. Black typeface. The sentence must read: ``ENERGY STAR [product 
type(s)] use at least ____% less energy annually than the Federal 
Maximum.'' or: ``ENERGY STAR [product type(s)] are at least ____% more 
efficient than the Federal Minimum.'' or: ``ENERGY STAR [product 
type(s)] must be rated with a [type of efficiency rating] of [rating] 
or higher.'' The specific wording of this statement will depend on the 
product category and the ENERGY STAR Program criteria in effect at the 
time of the labeled product's manufacture and labeling.
    (b) Examples. (1) The text on a label for a qualifying 
refrigerator-freezer must read:

    ENERGY STAR refrigerators use at least 20% less energy annually 
than the Federal Maximum.

    (2) The text on a label for a qualifying clothes washer must read:

    ENERGY STAR clothes washers are at least 112% more efficient 
than the Federal Minimum.

    (3) The text on a label for a qualifying dishwasher must read:

    ENERGY STAR dishwashers are at least 13% more efficient than the 
Federal Minimum.

    (4) The text on a label for a qualifying room air conditioner must 
read:

    ENERGY STAR room air conditioners are at least 15% more 
efficient than the Federal Minimum.

    (5) The text on a label for a qualifying central air conditioner 
must read:

    ENERGY STAR central air conditioners must be rated with a SEER 
of 12 or higher.

    (6) The text on a label for a qualifying heat pump must read:

    ENERGY STAR heat pumps must be rated with a HSPF of 7 or higher 
(for heating) and a SEER of 12 or higher (for cooling).

    (7) The text on a label for a qualifying gas-fired furnace must 
read:

    ENERGY STAR gas furnaces must be rated with an AFUE of 90 or 
higher.

    6. Appendix L is amended by the addition of a new Sample Label 10 
(which is an EnergyGuide with the ENERGY STAR logo) as follows:

Appendix L to Part 305--Sample Labels

* * * * *

BILLING CODE 6750-01-P

[[Page 64929]]

[GRAPHIC] [TIFF OMITTED] TP24NO98.001



BILLING CODE 6750-01-C

[[Page 64930]]

Sample Label 10
* * * * *
    7. Prototype Labels 1-5 and Sample Labels 1-9 of APPENDIX L are 
amended by the deletion of the words ``Important: Removal of this label 
before consumer purchase is a violation of Federal law (42 U.S.C. 
6302).'' at the bottom of each label and the addition, in their place 
and in the same typeface and size, of the following words: Important: 
Removal of this label before consumer purchase violates the Federal 
Trade Commission's Appliance Labeling Rule (16 CFR Part 305).

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 98-31202 Filed 11-23-98; 8:45 am]
BILLING CODE 6750-01-P