[Federal Register Volume 65, Number 64 (Monday, April 3, 2000)]
[Rules and Regulations]
[Pages 17554-17579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7970]



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Part II





Federal Trade Commission





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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''); Final Rule

  Federal Register / Vol. 65, No. 64 / Monday, April 3, 2000 / Rules 
and Regulations  

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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: Final rule.

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SUMMARY: The Federal Trade Commission (``the Commission'') grants 
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 enables 
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 some appliances 
under certain conditions. The Commission also announces 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: Effective: February 25, 2000. Manufacturers may avail themselves 
of the conditional exemption as of February 25, 2000. Manufacturers 
must begin to include the new language identifying the Federal Trade 
Commission on labels as soon as they print new labels.

FOR FURTHER INFORMATION CONTACT: James Mills, Attorney, Division of 
Enforcement, Rm 4616, Federal Trade Commission, Washington, DC 20580 
(202-326-3035; [email protected]).

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).
    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'' bar 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:
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    \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 manufacturers 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.

    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\
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    \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 EnergyGuide.

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16 CFR 305.11(a)(5)(i)(K).

    DOE and EPA staff and an appliance manufacturer \4\ 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.
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    \4\ The Maytag Company, by petition dated July 25, 1997.
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B. The ENERGY STAR Program

1. Description of the Program
    Section 127 of the Energy Policy Act of 1992 \5\ directed DOE, in 
conjunction with EPA, utilities, and appliance manufacturers, to submit 
a report to Congress assessing the potential for the development and 
commercialization of appliances that are substantially more efficient 
than required by state or federal law,\6\ 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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    \5\ Pub. L. 102-486, 106 Stat. 2776, 2835 (Oct. 24, 1992).
    \6\ 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 (1999).
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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

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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 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 joined 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.\7\ 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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    \7\ A discussion of DOE's criteria, together with lists of 
qualifying products, can be found on DOE's ENERGY STAR website, at 
www.energystar.gov>. EPA maintains a similar website at www.epa.gov/energystar.html>, 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. 
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. Currently, 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.\8\ An EF of 0.52 represents a 13% improvement in efficiency 
over DOE's minimum EF of 0.46;
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    \8\ 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.\9\ 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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    \9\ 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.\10\
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    \10\ 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.\11\
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    \11\ 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.\12\
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    \12\ 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 is being made available 
to Program participants only 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.\13\
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    \13\ The MOUs provide that each partner is responsible for using 
the logo in accordance with the MOU's terms. 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 announces today 
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.

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3. Current Use of the Logo and the Proposal To Include It on the 
EnergyGuide
    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 learned that many manufacturers, retailers and consumers wanted a 
single, ``augmented`` EnergyGuide label, which would be preferable to 
separate EnergyGuide and ENERGY STAR labels.
    Some manufacturers favored an augmented label because it would 
reduce their costs and allow them to assure proper identification of 
qualifying models, which is harder to control at the retailer level. 
Retailers believed 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 believed 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. Finally, 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.

C. The Notice of Proposed Rulemaking

    On November 24, 1998, the Commission published a Notice of Proposed 
Rulemaking proposing a conditional exemption to allow manufacturers to 
place the ENERGY STAR logo on EnergyGuides affixed to qualified 
products (63 FR 64921). The Commission noted that, although the ENERGY 
STAR logo is already appearing as a separate label on some qualifying 
appliances and most qualifying HVAC equipment covered by the Rule, an 
augmented label would be likely to lower manufacturers' labeling and 
monitoring costs and reduce the likelihood of mislabeling. The logo's 
highlighting of efficient appliances also could complement the Rule's 
objective of providing consumers with energy efficiency and consumption 
information. Finally, in conjunction with the descriptive information 
already on the EnergyGuide label, the logo could provide a context that 
would better ensure consumer understanding of the logo than if it were 
on a separate label.
1. The Terms of the Proposed Conditional Exemption
    The Commission proposed adding a new section to the Rule--305.19 
Exemptions--to codify the terms of the conditional exemption for those 
who wished to avail themselves of it. The Commission based the proposed 
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 an 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 (the 
NPR included a sample label that illustrated an EnergyGuide with the 
logo printed in conformity with the proposed conditions). 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.
    As a last condition, the Commission proposed requiring that 
manufacturers availing themselves of the conditional exemption add a 
sentence to explain the significance of the ENERGY STAR logo, citing 
its concern that the addition of the logo to the EnergyGuide without 
some explanation of its meaning on the face of the label itself might 
not be meaningful to consumers. The Commission proposed that 
manufacturers include a brief explanatory sentence below the 
comparability bar between the ``least'' and ``most'' numbers (the exact 
wording would depend on the product category.): ``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.''\14\
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    \14\ See 63 FR 64924 for the proposed wording of this statement 
on labels for the different types of products that would be covered 
by the proposed conditional exemption.
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2. Non-Substantive Amendment To Add the Commission's Name to the 
EnergyGuide
    The Commission also proposed amending the Rule so the Federal Trade 
Commission would be clearly identified as the government entity that 
requires manufacturers to affix the EnergyGuide label to their 
appliances, and to 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 was 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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    The Commission noted that, 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 in the ordinary course of 
business or they draft new labels for other reasons, such as a change 
in the ranges of comparability.

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The proposed language was included on the sample EnergyGuide in the 
NPR.\16\
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    \16\ See 63 FR 64924-25.
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3. Specific Issues and Questions for Comment
    In addition to asking for comment on any issues or concerns the 
public believed were relevant or appropriate to the Commission's 
consideration of the proposed exemption, the Commission also asked for 
comment on several specific questions: Whether the Commission should 
grant the proposed conditional exemption only to partners in the ENERGY 
STAR Program; whether the specific conditions under which the 
Commission was proposing the conditional exemption were appropriate 
(and if not, what conditions would be appropriate); whether the 
proposed explanatory statement was effectively worded and would be 
helpful to consumers; the benefits and economic impact of the proposed 
conditional exemption (especially on small businesses); and whether the 
ENERGY STAR logo and promotional materials convey accurate information 
to consumers (especially regarding overall operating cost over 
time).\17\
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    \17\ Id. at 64926.
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II. Discussion of the Comments and Final Amendments

A. The Proposed Conditional Exemption Generally

    The Commission received fifteen comments in response to the 
NPR.\18\ The comments were from four manufacturers,\19\ three non-
profit public interest groups,\20\ two utilities,\21\ two appliance 
manufacturer trade associations,\22\ two state energy offices,\23\ one 
utility association,\24\ and one federal agency.\25\ Generally 
speaking, all the commenters but two supported the Commission's 
proposal to make the conditional exemption available to those 
manufacturers who want to use it.\26\
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    \18\ PG&E & Electric Company (``PG&E'') (1); Gas Appliance 
Manufacturers Association (``GAMA'') (2); Northwest Energy 
Efficiency Alliance (``NEEA'') (3); American Council for an Energy 
Efficient Economy (``ACEEE'') (4); Maytag Corporation (``Maytag'') 
(5); Air-Conditioning & Refrigeration Institute (``ARI'') (6); 
Natural Resources Defense Council (``NRDC'') (7); American Gas 
Association (``AGA'') (8); General Electric Appliances (``GE'') (9); 
Sacramento Municipal Utility District (``SMUD'') (10); Oregon Office 
of Energy (``OOE'') (11); Whirlpool Corporation (``Whirlpool'') 
(12); Alliance Laundry Systems (``Alliance'') (13); California 
Energy Commission (``CEC'') (14); Department of Energy (``DOE'') 
(15). The comments are on the public record and are available for 
public inspection in accordance with the Freedom of Information Act, 
5 U.S.C. 552, and the Commission's rules of practice, 16 CFR 4.11, 
at the Consumer Response Center, Public Reference Section, Room 130, 
Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, 
DC. The comments are organized under the Appliance Labeling Rule, 
R611004, Energy Star Rulemaking.
    \19\ Maytag (5); GE (9); Whirlpool (12); and Alliance (13).
    \20\ NEEA (3); ACEEE (4); and NRDC (7).
    \21\ PG&E (1); and SMUD (10).
    \22\ GAMA (2); and ARI (6).
    \23\ OOE (11); and CEC (14).
    \24\ AGA (8).
    \25\ DOE (15).
    \26\ AGA (8) and GE (9) opposed the proposal.
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1. Comments in Support
    Thirteen comments expressed general support for the Commission's 
proposal.\27\ DOE's comment included information on the current status 
of the appliance manufacturing and marketing industry's participation 
in the Program, indicating that participation now includes two thousand 
retail stores, including Sears, Circuit City and Montgomery Ward as 
national retail chain partners, as well as many small retailers, and 
five major appliance manufacturers--Amana, Frigidaire, General 
Electric, Maytag, and Whirlpool.\28\
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    \27\ PG&E (1) p. 1; GAMA (2) p. 1; NEEA (3) pp. 1, 3; ACEEE (4) 
pp. 1-2; Maytag (5) p. 1; ARI (6) p. 1 (provided participation in 
the program remains optional); NRDC (7) pp. 1-2, 3, 8; SMUD (10) pp. 
1-2; OOE (11) pp. 1, 5; Whirlpool (12) p. 2; Alliance (13) p. 2 
(provided use of the ENERGY STAR logo does not require financial or 
other support for retail marketing efforts; does not sell its 
products at retail); CEC (14) p. 1; DOE (15) pp. 1-2.
    \28\ DOE (15) pp. 1-2.
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a. Impact on Consumers and Others

    Twelve comments addressed the effect the proposed conditional 
exemption would have on consumers and entities other than appliance 
manufacturers, such as retailers and utilities.\29\ Ten of these 
mentioned benefits that the exemption would provide consumers.\30\ 
These commenters agreed that the conditional exemption would make it 
easier for consumers easily to identify the highly efficient products 
that qualify for the Program. Five commenters noted in particular that 
the conditional exemption would result in an enhanced EnergyGuide label 
that would give consumers better, more easily understood 
information.\31\ CEC stated:
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    \29\ PG&E (1) p. 1; NEEA (3) p. 2; ACEEE (4) p. 2; Maytag (5) p. 
3; ARI (6) p. 2; NRDC (7) p. 5; AGA (8) p. 2; GE (9) pp. 3-5; OOE 
(11) pp. 3-4; Whirlpool (12) p. 1; CEC (14) p. 2; DOE (15) p. 4.
    \30\ PG&E (1) p. 1; NEEA (3) p. 2; ACEEE (4) p. 2; Maytag (5) p. 
3; ARI (6) p. 2; NRDC (7) p. 5; OOE (11) pp. 3-4; Whirlpool (12) p. 
1; CEC (14) pp. 2, 4; DOE (15) p. 4. The comments in opposition from 
AGA and GE are discussed in II.A.2, below.
    \31\ NEEA (3) p. 1; ACEEE (4) p. 1; NRDC (7) p. 2; SMUD (10) pp. 
1-2; CEC (14) p. 1.

    We strongly believe that the proposed conditional exemption will 
benefit the public. The ENERGY STAR logo on the EnergyGuide label 
will clearly and consistently identify qualifying highly efficient 
products. This conditional exemption will help to foster the growing 
public awareness of the value of energy efficiency in the home and 
the demand for new products that can help us conserve resources 
while enjoying the convenience and luxury of technology.\32\
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    \32\ CEC (14) p. 2.

Some commenters said that the exemption would result in a higher degree 
of assurance that the logo is applied only to qualifying products,\33\ 
or would make it easier for retail sales staff to identify efficient 
products \34\ or to promote qualified appliances.\35\ OOE noted that 
``Retailers, especially, may appreciate the fact that they will no 
longer have to police which appliances on their sales floor have the 
ENERGY STAR logo affixed from day to day.'' \36\
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    \33\ PG&E (1) p. 1; OOE (11) p. 1; Whirlpool (12) p. 1.
    \34\ NEEA (3) p. 2; NRDC (7) p. 5; CEC (14) p. 4 (would help 
manufacturers, retailers, and utilities to explain the benefit of 
these products).
    \35\ CEC (14) p. 2; DOE (15) p. 4.
    \36\ OOE (11) p. 4.
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    Eight commenters stated that the ENERGY STAR logo and promotional 
materials convey accurate information to consumers, especially 
respecting the cost over time of purchasing and operating qualifying 
appliances.\37\ ACEEE pointed out that the ENERGY STAR logo works in 
concert with the EnergyGuide to provide information on operating 
cost.\38\ NEEA and CEC stated that, with regard to consumer information 
and promotional materials, and the issue of overall cost over time of 
purchasing and operating qualifying appliances versus non-qualifying 
appliances, ENERGY STAR attempts to give consumers the tools to make 
educated purchasing decisions, taking into account possible utility 
bill savings.\39\ NRDC said that ``Much of the supporting materials 
developed by EPA/DOE and their contractors do indeed try to educate 
consumers about the overall product cost (purchase cost plus operating 
costs). * * *'' \40\ Finally, commenting on the promotional materials 
it developed for the Program, DOE stated:
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    \37\ NEEA (3) pp. 2-3; ACEEE (4) p. 2; Maytag (5) p. 4; ARI (6) 
p. 2; NRDC (7) p. 6; OOE (11) p. 4; CEC (14) pp. 2, 5; DOE (15) p. 
4. See section II.A.2 for a discussion of the contrary position of 
AGA and GE.
    \38\ ACEEE (4) p. 2.
    \39\ NEEA (3) p. 3; CEC (14) pp. 2, 5.
    \40\ NRDC (7) p. 6. NRDC hoped that a future, redesigned 
EnergyGuide would fulfill this function, and pledged its assistance 
and support to this end.

    All of the promotional materials developed by DOE convey 
accurate information about the ENERGY STAR label, its meaning, and 
the benefits that can be expected by

[[Page 17558]]

consumers. The Department has commissioned hundreds of hours of 
technical and economic analyses concerning the product mixes, 
expected market penetrations, and consumer payback. The Department 
has worked very closely with EPA to ensure that our consumer 
education materials accurately convey the message that the ENERGY 
STAR differentiates products that use less energy and as such, can 
save consumers money on their utility bills.\41\
---------------------------------------------------------------------------

    \41\ DOE (15) p. 4.

    Five commenters observed that the conditional exemption would 
likely benefit those public utilities that have developed incentive 
programs that provide rebates to consumers who purchase energy 
efficient appliances and heating and cooling equipment.\42\ These 
commenters stated that the ENERGY STAR logo on the EnergyGuide would 
make it easier for utility staff to recognize products that qualify for 
their programs:
---------------------------------------------------------------------------

    \42\ NEEA (3) p. 2; Maytag (5) p. 3; NRDC (7) p. 5; CEC (14) p. 
2; DOE (15) p. 4.

    Appliance manufacturers, major retailers and many utilities have 
signed partnership agreements to use the symbol to promote efficient 
products. The conditional exemption will establish consistency in 
product labeling, making it easier for utilities and retailers to 
promote qualified products, and most importantly, making it easier 
for consumers to recognize them in stores.\43\
---------------------------------------------------------------------------

    \43\ CEC (14) p. 2.
---------------------------------------------------------------------------

b. Impact on Manufacturers

    Eleven commenters addressed the impact of the proposed conditional 
exemption on manufacturers.\44\ Nine of these thought that the proposal 
would benefit manufacturers economically.\45\ Almost all of these 
comments contended that the conditional exemption would reduce printing 
costs to manufacturers over time \46\ because they would be able to use 
one combined label for the required EnergyGuide and voluntary ENERGY 
STAR disclosures, rather than two, as before. Five commenters believed 
that the proposal would result in an increase in the sale of energy 
efficient products or increased sales revenues for manufacturers, with 
two of these, ACEEE and OOE, suggesting that increased sales of higher 
efficiency units would result in higher revenues because such units 
tend to cost more and produce more profit per unit sold.\47\
---------------------------------------------------------------------------

    \44\ GAMA (2) p. 1; NEEA (3) p. 2; ACEEE (4) p. 2; Maytag (5) p. 
3; ARI (6) p. 2; NRDC (7) p. 5; GE (9) p. 2; OOE (11) p. 3; Alliance 
(13) p. 2; CEC (14) p. 4; DOE (15) p. 4. Some of these commenters 
also addressed the impact of the proposed conditional exemption on 
retailers, as discussed in II.A.1.a, above.
    \45\ GAMA (2) p. 1; NEEA (3) p. 2; ACEEE (4) p. 2; ARI (6) p. 2; 
NRDC (7) p. 5; OOE (11) p. 3; Alliance (13) p. 2; CEC (14) p. 4; DOE 
(15) p. 4. Maytag stated that there would be no economic impact on 
manufacturers. Maytag (5) p. 3. GE contended that the conditional 
exemption would have a negative impact on manufacturers. GE (9) p. 
2. See the discussion of GE's comments in section II.A.2, below.
    \46\ Three commenters noted that the initial cost of the 
labeling change, for those who avail themselves of the conditional 
exemption, would be inconsequential, but that combining the labels 
would reduce labeling costs in the long run. ARI (6) p. 2; NRDC (7) 
p. 5; OOE (11) p. 3.
    \47\ ACEEE (4) p. 2 (ACEEE also pointed out that the conditional 
exemption would not injure individual manufacturers because it would 
be voluntary and manufacturers perceiving no benefits could continue 
with their current labeling programs.); NRDC (7) p. 5; SMUD (10) p. 
2; OOE (11) p. 3; Whirlpool (12) p. 1.
---------------------------------------------------------------------------

2. Comments in Opposition
    Two commenters opposed the proposed conditional exemption. AGA 
contended that the EnergyGuide label should disclose energy use and 
efficiency descriptors derived using source-based data, rather than 
end-use data: \48\
---------------------------------------------------------------------------

    \48\ Source-based data includes the cost of producing the energy 
to fuel the appliance, as well as the energy production's impact on 
the environment; end-use data considers only the amount of energy 
used to fuel the appliance.

    The Commission is currently limited in its EnergyGuide labeling 
program to use energy descriptors, provided by the Department of 
Energy (DOE), that provide narrow and misleading views of energy 
efficiency. In some cases, particularly when the appliances have 
different fuel sources, these descriptors distort how consumers view 
the overall cost and environmental impacts of operating appliances. 
For appliances that use competing fuels, this exemption may 
exacerbate the problem. * * * For appliances that use competing 
fuels, consumers would not benefit from the addition of the ENERGY 
STAR on the EnergyGuide label.
    The Commission should disclose source-based information on 
EnergyGuides in order to allow consumers to translate a concern for 
the environment and a finite supply of fossil fuels into positive 
action when making purchasing decisions. In addition to promoting 
sound public policy, using source-based data provides Congress, the 
Commission, DOE and the public with a more accurate measurement of 
(1) energy consumption, (2) associated emissions, and (3) 
conservation potential.\49\
---------------------------------------------------------------------------

    \49\ AGA (8) pp. 2, 5.

    GE also opposed the proposed conditional exemption. Noting that it 
is ``proud to be an Energy Star partner,'' GE stated that it believed 
the Program is working in its present form (with the ENERGY STAR logo 
applied as a separate label) and that it saw no reason for a change 
such as the one requested in Maytag's petition. GE maintained that the 
Commission should conduct an evaluation of each aspect of the ENERGY 
STAR Program, from the logo to the partnership, and provide the public 
with an opportunity for comment.\50\ GE contended:
---------------------------------------------------------------------------

    \50\ GE (9) pp.1-2.

    Petitioners have failed to demonstrate the need to exempt the 
Energy Star logo from the general prohibition against placing 
additional information on the EnergyGuide label. The Energy Star 
logo is a strictly voluntary program and elements of the program 
should not appear on the mandatory EnergyGuide label. * * * The 
current labeling scheme is sufficient to meet consumers' needs for 
energy consumption information.\51\
---------------------------------------------------------------------------

    \51\ Id. pp.5-6.

    GE asserted that the proposed conditional exemption would penalize 
manufacturers of products that do not qualify for inclusion in the 
ENERGY STAR Program, and argued that the impact on these manufacturers, 
as well as the validity of the criteria for inclusion in the Program, 
should be subject to careful analysis under the standards of the 
---------------------------------------------------------------------------
Administrative Procedure Act, 5 U.S.C. 551 et seq.:

    [N]either the Commission nor any other agency has developed 
record evidence to support the minimum qualifications established 
for Energy Star products. As an example, refrigerators must be 
20% more efficient than the DOE standards. Why? What 
national objective does a 20% level better achieve than 10%, 5% or 
25%? What is the impact on competition of the selected level? 
Information on these issues, if it exists, has never been provided 
to interested parties. The Commission must remedy this 
oversight.\52\

    \52\ Id. p.2.

    GE also contended that the ENERGY STAR Program's use, with the logo 
and in Program materials, of the slogan ``Saving the Earth,'' without 
qualification as to how the Program actually helps the environment, may 
violate the Commission's Guides for the Use of Environmental Marketing 
Claims, 16 CFR part 260 (1999), which require that such claims be 
substantiated.\53\
---------------------------------------------------------------------------

    \53\ Id., p.3-4.
---------------------------------------------------------------------------

    Finally, GE argued that the conditional exemption would mislead 
consumers into thinking that they are purchasing superior products when 
they are not because the Energy Star label does not distinguish between 
refrigerators that are 20% and 40% better than the standard. It 
contended that putting both products on an apparent equal footing 
misleads the consumer, who focuses on the logo, thinking that the less 
efficient product is just as efficient as the 40% model.\54\
---------------------------------------------------------------------------

    \54\ Id., p.4.
---------------------------------------------------------------------------

3. Final Amendments
    After careful consideration of the comments, the Commission is 
amending the Rule to permit (but not require)

[[Page 17559]]

appliance manufacturers that are members of the EPA/DOE ENERGY STAR 
Program to place the ENERGY STAR logo on the EnergyGuides they affix to 
those of their products that qualify for inclusion in the ENERGY STAR 
Program. The Commission agrees with the comments that maintained that 
inclusion of the logo on labels for qualified products would help 
consumers identify and purchase more energy-efficient products, and 
that manufacturers electing to print the logo on their EnergyGuides, 
rather than to attach it by means of a separate label, would be able to 
save labeling costs. The Commission is modifying the wording and some 
substantive aspects of the proposal, however, in response to comments 
offering suggestions regarding placement of the logo on the EnergyGuide 
and the Explanatory Statement, as discussed in sections II.B.2., below.
    Based on the comments received, the Commission has concluded that 
the ENERGY STAR logo and Program convey accurate, useful information to 
consumers. The Commission recognizes, as DOE pointed out in its 
comment, that this Program was carefully developed and that extensive 
public participation was sought and considered in finalizing the 
Program. The comments describing the ENERGY STAR Program's benefits to 
consumers, appliance manufacturers and retailers, and public utilities 
that maintain incentive rebate programs for consumers who purchase 
energy efficient appliances, strongly support implementation of the 
conditional exemption.
    The Commission disagrees with GE's contention that it must conduct 
an evaluation--either through administrative rulemaking or otherwise--
of every aspect of the ENERGY STAR Program before permitting 
manufacturers to print the logo on EnergyGuides on their qualifying 
products. The Commission is not required by statute to exclude non-
required information from the EnergyGuide. Rather, the Commission 
included this prohibition in the Rule on its own initiative. Therefore, 
the Commission has the authority to repeal this prohibition entirely, 
or to specify the conditions under which clearly identified non-
required information would be permitted. In this instance, the 
Commission is deciding to permit the addition of information that is 
truthful and accurate under a program established and monitored by two 
sister agencies. As discussed in section I.B, above, DOE and EPA both 
subjected their initially separate versions of the ENERGY STAR Program 
to extensive public scrutiny and participation during the development 
of their Programs, and the Commission is satisfied with that aspect of 
the current Program.
    Further, the Commission is not persuaded by GE's argument that the 
ENERGY STAR logo on EnergyGuides will mislead consumers because the 
ENERGY STAR label will not distinguish among products that are more 
efficient than the DOE standard. Because the specific energy use 
information of the labeled model will appear on the EnergyGuide, the 
actual difference in energy use among competing models will be readily 
apparent. Currently, consumers can see both the EnergyGuide and ENERGY 
STAR labels on products and can use the information together to make 
purchasing decisions if they wish. Allowing the logo on the EnergyGuide 
makes it easier for consumers to use the information together, while 
reducing labeling costs and the possibility of mislabeling.
    Nor does the Commission agree with GE that the appearance of the 
logo on EnergyGuides will create an inappropriate impression of federal 
government endorsement. The current practice of using separate ENERGY 
STAR stickers containing DOE's and EPA's names does not appear to raise 
this concern and it is unlikely that consolidation of the labels will 
do so.\55\
---------------------------------------------------------------------------

    \55\ GE apparently believes that, because the EnergyGuide is a 
mandatory label, consumers would perceive the ENERGY STAR on the 
Energy Guide as a government endorsement, but would not perceive the 
separate ENERGY STAR label in the same way. The ENERGY STAR label, 
which often contains the identifying letters of EPA and/or DOE, is 
already widely seen on appliances and other products (e.g., 
computers and televisions) where there are no EnergyGuides. To the 
extent that consumers perceive such labeled products as ``government 
endorsed'' they very likely correctly understand that the 
``endorsement'' is limited to energy efficiency or energy saving 
features, and not as a government suggestion that ENERGY STAR 
labeled products are superior to others in all respects. 
Accordingly, the Commission does not share GE's concerns regarding 
an inappropriate impression of Federal Government endorsement.
---------------------------------------------------------------------------

    GE has expressed its concern more than once during this proceeding 
that promotional materials produced by DOE for the ENERGY STAR Program 
contain unqualified claims of environmental benefit. DOE has undertaken 
a review of the claims in its promotional materials. DOE intends to 
republish its materials with whatever changes may be necessary so that 
they are in compliance with the Commission's Guides for the Use of 
Environmental Marketing Claims.
    Finally, the Commission does not have the authority to require the 
inclusion of source-based energy use data on the EnergyGuide, as AGA 
suggested. As noted in AGA's comment, the directive in section 
324(c)(1)(A) of EPCA \56\ is that the Commission require a label that 
discloses energy use information derived from DOE's test procedures, 
which determine end-use energy use data only.
---------------------------------------------------------------------------

    \56\ 42 U.S.C. 6294(c)(i)(A).
---------------------------------------------------------------------------

B. Specific Aspects of the Proposed Conditional Exemption

1. Limitation of the Conditional Exemption to Energy Star Partners

a. Comments

    Ten commenters addressed the Commission's proposal to permit only 
manufacturers who have signed an MOU with DOE or EPA to place the 
ENERGY STAR logo on EnergyGuides affixed to their qualifying products. 
Seven of these agreed that the proposed conditional exemption should be 
limited to partners in the ENERGY STAR Program.\57\ ACEEE pointed out 
that ``ENERGY STAR'' is a trademark that can only be used with EPA's 
and DOE's permission, and that it is the prerogative of only those 
agencies (and not of the FTC) to permit non-partners to use the 
logo.\58\ Three other commenters stated that to permit the use of the 
logo on EnergyGuides by non-partners would negate the value and 
credibility of the Program and violate EPA's and DOE's guidelines.\59\ 
OOE stated that EPA and DOE need control over the use of the logo, and 
that the MOU should pose no problems for manufacturers,\60\ and DOE 
said that the licensing agreement provides the federal government with 
needed control over the logo's use.\61\ Whirlpool agreed that 
participation in the conditional exemption should be limited to 
partners that have signed an MOU with DOE or EPA. Whirlpool also 
recommended that the Commission clarify that partners who sign MOUs 
that are limited to specific product categories can only put the ENERGY 
STAR logo on qualifying products within the scope of the MOU. For 
example, if a full-line manufacturer participates in the ENERGY STAR 
program only with respect to its refrigerators, that manufacturer would 
be permitted to use the ENERGY STAR logo only on EnergyGuides affixed 
to qualifying refrigerators, and not to other

[[Page 17560]]

products, such as clothes washers or dishwashers.\62\
---------------------------------------------------------------------------

    \57\ NEEA (3) p.2; ACEEE (4) p.1: NRDC (7) pp.3-4; OOE (11) p.2; 
Whirlpool (12) p.1; CEC (14) p.3; DOE (15) p.3.
    \58\ ACEEE (4) p.1.
    \59\ NEEA (3) p.2; NRDC (7) pp.3-4; CEC (14) p.3.
    \60\ OOE (11) p.2.
    \61\ DOE (15) p.3.
    \62\ Whirlpool (12) p.1.
---------------------------------------------------------------------------

    Three commenters did not agree with the limitation proposed in the 
NPR. All of these recommended that the exemption should not be limited 
only to partners, but should be available to all manufacturers whose 
products meet the Program's criteria.\63\
---------------------------------------------------------------------------

    \63\ Maytag (5) p.2; ARI (6) p.1 (ARI supported requiring 
manufacturers to have approval from either EPA or DOE to use the 
logo, but apparently did not believe formal partnership should be 
required.); Alliance (13) p. 1 (Alliance sells its products only in 
the multi-housing and Federal Government contract markets, and not 
at retail).
---------------------------------------------------------------------------

b. Final Amendments

    The ENERGY STAR logo and name belong to EPA, which has licensed 
their use to DOE, and use of the name and logo by manufacturers is 
carefully controlled by the specific guidelines contained in the MOUs 
that participating manufacturers sign with each agency. Because EPA and 
DOE use the MOUs to maintain the Program's integrity, the Commission 
will not permit use of the ENERGY STAR name or logo on EnergyGuides by 
a manufacturer that has not signed an MOU with EPA or DOE.
    To address Whirlpool's concern that a full-line manufacturer that 
has signed an MOU only with respect to one line of products might use 
the ENERGY STAR logo on another line, the conditional exemption is 
drafted to apply only to those products that are the subject of the MOU 
the manufacturer has signed.
    Accordingly, Sec. 305.19(a)(2) of the amended Rule limits the 
conditional exemption only to partners in the ENERGY STAR Program that 
have signed an MOU with EPA or DOE, and only to those products that are 
covered by the MOU.
2. Other Conditions for Use of the EnergyGuide

a. Generally

    In response to a general question in the NPR about the 
appropriateness of the conditions under which the conditional exemption 
would be granted, four commenters stated without elaboration that the 
conditions were reasonable or appropriate.\64\ Two others agreed that 
the conditions were appropriate with the exception of the requirement, 
discussed below, that the logo appear with the Explanatory Statement 
proposed in the NPR.\65\
---------------------------------------------------------------------------

    \64\ ACEEE (4) p.1; ARI (6) p.1; Alliance (13) p.1; DOE (15) 
p.3.
    \65\ NRDC (7) p.3; OOE (11) p.2.
---------------------------------------------------------------------------

b. Placement of the Logo on the EnergyGuide

i. Comments
    Ten commenters addressed the question in the NPR regarding the most 
cost-effective method for placing the ENERGY STAR logo on the 
EnergyGuide. Six of these said that the best method was for 
manufacturers to print the logo on the EnergyGuide at the factory.\66\ 
Of these, ACEEE, Alliance, and DOE pointed out that printing at the 
factory is the most cost-effective method, and PG&E and NRDC stated 
that the approach would reduce or avoid mislabeling (intentional or 
unintentional). Two commenters thought that the decision as to the most 
cost-effective way of placing the ENERGY STAR logo on EnergyGuides 
should be left to the manufacturers,\67\ and two others recommended 
that the Commission indicate that putting the logo on EnergyGuides 
would be optional.\68\
---------------------------------------------------------------------------

    \66\ PG&E (1) p.1; ACEEE (4) p.1; NRDC (7) p.4; OOE (11) p.2; 
Alliance (13) p.1; DOE (15) p.3.
    \67\ Maytag (5) p.2; CEC (14) pp.2, 3.
    \68\ ARI wanted the Commission to make clear that the ENERGY 
STAR Program was voluntary. ARI (6) p.1. Whirlpool wanted an 
indication that participating manufacturers would not be required to 
label qualifying products, in case, for some reason, they 
inadvertently failed to print the logo on EnergyGuides attached to 
qualifying products. Whirlpool (12) p.2.
---------------------------------------------------------------------------

ii. Final Amendments
    The Commission believes that manufacturers should bear the 
responsibility for assuring that the ENERGY STAR logo appears properly 
and consistently on qualifying products. Moreover, manufacturers would 
be able to ensure consistent and proper placement of the logo more 
efficiently and at a lower cost if the logo were permitted on the 
EnergyGuide itself. While the Commission recognizes that the most 
efficient way for manufacturers to fulfill this responsibility would 
probably be to print the ENERGY STAR logo on EnergyGuides during the 
printing process, the Commission nevertheless wishes to afford 
manufacturers the latitude to place the logo on EnergyGuides by 
whatever means is most efficient for them, provided the placement 
complies with the requirements for location and size. They should then 
affix those EnergyGuides on their ENERGY STAR-qualified covered 
products in the same manner they use to affix EnergyGuides without the 
ENERGY STAR logo to their other covered products.
    The Commission also notes that the requirement to place the logo on 
EnergyGuides applies only to those manufacturers who participate in the 
ENERGY STAR Program and elect to avail themselves of the conditional 
exemption. The extent to which participating manufacturers wish to use 
the ENERGY STAR logo on labels attached to qualifying products is up to 
them.
    Accordingly, Sec. 305.19(a)(3) of the amended Rule provides that 
manufacturers that choose to use the conditional exemption may print 
the ENERGY STAR logo on EnergyGuides for qualified products as part of 
the usual label printing process or may place the logo on EnergyGuides 
by whatever means is most efficient for them, provided the placement 
complies with the applicable size, location, and appearance 
requirements specified in Sec. 305.19(a)(4).

c. The Explanatory Statement

i. Comments
    Eleven commenters addressed the Explanatory Statement that the 
Commission proposed for inclusion on the EnergyGuides of qualifying 
products along with the ENERGY STAR logo.\69\ Seven of these contended 
that consumers needed either the proposed statement or some other 
language explaining the logo to understand the significance of the 
logo's presence on the EnergyGuide.\70\ NEEA, Maytag, ARI, Whirlpool, 
and Alliance thought that the Explanatory Statements proposed in the 
NPR were ``appropriate,'' would help provide consumers with more 
purchase decision information, or would reinforce consumer 
understanding.\71\ CEC agreed that the proposed Explanatory Statement 
was appropriate, and suggested that the Commission also include the 
additional tagline, ``The symbol for energy efficiency.'' \72\ NEEA and 
NRDC agreed with CEC's recommended language.\73\ ACEEE contended that 
explanatory statements are not essential, but, if properly done, could 
offer some marginal benefits by explaining why

[[Page 17561]]

some products get an ENERGY STAR and others do not, provided the 
statements are easy to understand and do not contain terms that are 
unfamiliar to consumers (such as ``SEER'' and ``Federal Maximum''). 
ACEEE suggested that the statement read, ``The ENERGY STAR is awarded 
to the most efficient products on the market.'' \74\ OOE suggested, 
``Energy Star is an EPA/DOE program that helps consumers identify the 
most efficient appliances available today.'' \75\ DOE suggested, ``The 
ENERGY STAR logo identifies the most energy efficient products.'' \76\
---------------------------------------------------------------------------

    \69\ NEEA (3) p.2; ACEEE (4) p.1; Maytag (5) pp.2, 3; ARI (6) 
pp.1, 2; NRDC (7) pp.3, 5; SMUD (10) p.2; OOE (11) pp.2-3; Whirlpool 
(12) p.2; Alliance (13) pp.1, 2; CEC (14) pp.3, 4; DOE (15) p.3.
    \70\ NEEA (3) p.2; ACEEE (4) p.1; Maytag (5) p.2; ARI (6) p.1; 
Whirlpool (12) p.2; Alliance (13) p.1; CEC (14) p.3.
    \71\ NEEA (3) p.2; (4) p.1; Maytag (5) p.2 (Maytag noted that 
``The explanatory statement containing the term `x% less energy 
annually that the Federal maximum' is clearer than expressing the 
same concept as `x% more efficient that the Federal minimum.' ''); 
ARI (6) p.1; Whirlpool (12) p.2; Alliance (13) p.1.
    \72\ CEC (14) p.3.
    \73\ NEEA (3) p.2 (in addition to the proposed explanatory 
statement); NRDC (7) pp.3, 4 (as an alternative to the proposed 
explanatory statement).
    \74\ ACEEE (4) pp.1-2.
    \75\ OOE (11) p.2.
    \76\ DOE (15) p.3.
---------------------------------------------------------------------------

    In connection with their suggestions of alternative language for 
the Explanatory Statement, OOE and NRDC contended that the proposed 
language in the Explanatory Statements for the different product 
categories was too complex and technical.\77\ OOE also noted that the 
criteria for qualifying for the ENERGY STAR Program are likely to 
change over time, which would necessitate corresponding adjustments to 
labels.\78\ Without suggesting specific language, SMUD also recommended 
against technical product-by-product qualifiers, and urged 
simplicity.\79\
---------------------------------------------------------------------------

    \77\ OOE (1) pp.2-3; NRDC (7) p.3 (recommending that the 
explanatory statement be simple).
    \78\ OOE (1) pp.2-3.
    \79\ SMUD (10) p.2 (also noting that technical terms detract 
from the abilities of consumers and sales staff to use the label. 
NRDC made this same point. NRDC (7) p.3.).
---------------------------------------------------------------------------

    Seven commenters addressed whether the ENERGY STAR logo or the 
Explanatory Statement would affect consumers' understanding of the 
information on the EnergyGuide.\80\ Alliance and DOE did not believe 
that the Explanatory Statement would affect consumers' understanding of 
the other parts of the EnergyGuide.\81\ Maytag, ARI and CEC stated that 
the Statement would be complementary to or would clarify the other 
information on the label and would assist consumers in understanding 
the EnergyGuide's overall content.\82\ OOE did not think that the 
addition of the logo would adversely affect consumer understanding of 
the other information on the EnergyGuide, primarily because of the 
amount of promotion of the program done by EPA and DOE.\83\ NRDC and 
CEC contended that the addition of the logo to the EnergyGuide could 
help overcome what these commenters referred to as the common consumer 
misconception that the EnergyGuide label itself denotes energy 
efficiency.\84\
---------------------------------------------------------------------------

    \80\ Maytag (5) p.3; ARI (6) p.2; NRDC (7) p.5; OOE (11) p.3; 
Alliance (13) p.2; CEC (14) p.4; DOE (15) p.3.
    \81\ Alliance (13) p.2; DOE (15) p.3.
    \82\ Maytag (5) p.3; ARI (6) p.2; CEC (14) p.4.
    \83\ OOE (1) p.3.
    \84\ NRDC (7) p.5; CEC (14) p.4.
---------------------------------------------------------------------------

    Six commenters addressed whether the Commission should require that 
the ENERGY STAR logo and Explanatory Statement appear in a color of ink 
different from the black ink on the rest of the EnergyGuide.\85\ Most 
concluded that the additional expense to manufacturers would not be 
justified by a sufficiently significant increase in communication 
effectiveness. Maytag and ARI stated that the ENERGY STAR logo itself 
is the primary visual attraction, and that the additional cost would be 
unjustified.\86\ OOE thought that a separate color of ink might be 
helpful, but was not sure that the additional expense would be 
justified by a commensurate increase in effectiveness.\87\ CEC stated:
---------------------------------------------------------------------------

    \85\ Maytag (5) p.2; ARI (6) p.2; OOE (11) p.3; Alliance (13) 
p.1; CEC (14) p.4; DOE (15) p.3.
    \86\ Maytag (5) p.2; ARI (6) p.2.
    \87\ OOE (11) p.3.

    Adding the ENERGY STAR logo in a different color might be more 
visible for consumers, although it would be more expensive for 
manufacturers. Manufacturers could be given the option of using a 
``line art'' (one color) version of the logo in a different color 
(such as blue or green), or manufacturers could use the 4-color 
version of the ENERGY STAR logo.\88\
---------------------------------------------------------------------------

    \88\ CEC (14) p.4.

DOE recommended that black ink be used for all explanatory language 
concerning ENERGY STAR.\89\
---------------------------------------------------------------------------

    \89\ 89 DOE (15) p.3.
---------------------------------------------------------------------------

ii. Final Amendments
    The record indicates that consumer understanding would be increased 
with a brief explanation of the ENERGY STAR logo on the EnergyGuide, 
and that an Explanatory Statement would not adversely affect consumers' 
understanding of the rest of the information on the EnergyGuide. The 
majority of the commenters, however, believed that the explanatory 
language proposed in the NPR is more specific and detailed than 
necessary. The Commission is persuaded that a simpler, less technical, 
more generic approach would be more helpful to consumers and more 
likely to communicate clearly the significance of the ENERGY STAR logo 
on the label. In addition, a simpler, non-specific Explanatory 
Statement would have the advantage of not needing to be changed 
whenever the criteria for ENERGY STAR qualification are modified.
    In considering possible alternative language for the Explanatory 
Statement, the Commission has reviewed the ``taglines'' suggested by 
the commenters, and has decided to use a simple statement that draws 
from these suggestions. In choosing a tagline, the Commission 
recognizes that, although models labeled with the ENERGY STAR logo are 
more efficient as a group than most of those not so labeled, some 
products made by manufacturers not in the ENERGY STAR Program may be as 
efficient or more efficient. To accommodate this situation, the 
Commission has adopted a tagline that states that the ENERGY STAR is 
``A symbol of energy efficiency,'' instead of ``The symbol for energy 
efficiency,'' as the tagline currently most often used by DOE and EPA 
reads. Thus, the Commission has determined to use the phrase ``ENERGY 
STAR A Symbol of Energy Efficiency'' as a tagline to replace the 
Explanatory Statement proposed in the NPR. Accordingly, 
Sec. 305.19(a)(5) requires that the Explanatory Statement, ``ENERGY 
STAR A Symbol of Energy Efficiency'' appear on all EnergyGuides on 
which the ENERGY STAR logo appears.
    Further, in keeping with the comments suggesting the importance of 
simplicity regarding the explanatory statement and how it functions to 
inform consumers of the meaning of the logo, the Commission has changed 
the location of the statement from the location proposed in the NPR. 
The Commission is concerned that the distance and visual material that 
separate the tagline from the logo when they are above and below the 
bar, as proposed in the NPR, are visually confusing and could interfere 
with the ability of consumers to associate the two together at a 
glance. Accordingly, Sec. 305.19(a)(5) of the amendments now requires 
that the tagline be located directly next to the logo above the bar, 
rather than below the bar.
    Virtually of the commenters that addressed whether the Commission 
should require that the ENERGY STAR logo and the Explanatory Statement 
appear in a different color of ink agreed that, although the 
requirement might somewhat increase the communication effectiveness of 
the logo and statement, the increase would not justify the additional 
cost to manufacturers. Accordingly, the Commission is not requiring the 
logo and statement to appear in ink of a color different from that of 
the other information on the EnergyGuide. Moreover, to avoid potential 
consumer confusion if some, but not all, manufacturers were to use a 
different colored ink, the Commission is requiring specifically that 
the logo and Explanatory Statement appear in process black ink.

[[Page 17562]]

C. Proposed Amendment To Add the Commission's Name to the EnergyGuide

1. Comments
    Whirlpool and GE addressed the Commission's proposal to add the 
identity of the Federal Trade Commission on the label as the agency 
responsible for enforcing the Appliance Labeling Rule. Whirlpool 
stated:

    This can be easily accomplished as part of a natural transition 
to new EnergyGuide labels with new model introductions, normal 
changes emanating from changes in comparability and as inventories 
of old label stock are consumed.\90\

    \90\ Whirlpool (12) p.2.
---------------------------------------------------------------------------

GE expressed concern about the proposal tangentially in connection with 
its opposition to the overall proposal to add the ENERGY STAR logo to 
the EnergyGuide:

    Allowing the Energy Star logo to be placed on the mandatory 
EnergyGuide label has the potential to mislead consumers to believe 
that the Federal Government actually endorses the product. Consider 
the impact of having the names of FTC, DOE and EPA on a product 
label. The potential is substantial that consumers will conclude 
that these government agencies together have determined that this 
product is superior to those that do not contain the label.\91\
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    \91\ GE (9) p.5.
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2. Final Amendments
    The Commission has concluded that the addition of the Federal Trade 
Commission's name on the EnergyGuide is desirable to clarify the 
identity of the agency with the authority for enforcing the Appliance 
Labeling Rule, especially on those labels bearing the ENERGY STAR logo, 
on which EPA and DOE also will be identified. The Commission does not 
agree with GE's assertion that the appearance of the Commission's name 
(along with EPA's and DOE's) will mislead consumers into thinking that 
the labeled product is superior to those products with labels without 
the ENERGY STAR logo. Rather, the Commission believes that consumers 
will see that there is a label on the product, required by the Federal 
Trade Commission, that contains energy use information and an 
indication that the product is more energy efficient than many other 
similar products in the marketplace.\92\
---------------------------------------------------------------------------

    \92\ Adding the Federal Trade Commission's name also will help 
consumers who have questions about the EnergyGuide or who observe 
products without labels to know where to go for additional 
information or to complain.
---------------------------------------------------------------------------

    Consequently, Secs. 305.11(a)(5)(i)(I), 305.11(a)(5)(ii)(H), and 
305.11(a)(5)(iii)(H) of the amended Rule replace the language at the 
bottom of the current EnergyGuide with the following statement:

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

D. Initiative of the American Council for an Energy Efficient Economy

    The Commission is aware that a group of stakeholders organized by 
the American Council for an Energy Efficient Economy (``ACEEE''), a 
public interest group concerned with promoting energy efficiency, has 
recently undertaken an initiative to study alternative designs for the 
EnergyGuide. The Commission's staff is involved in an advisory capacity 
in this project. The Commission understands that ACEEE is not likely to 
finish its research and prepare a petition for the Commission before 
the end of a year's time. The Commission will continue to follow this 
initiative, and will consider ACEEE's recommendations, if appropriate, 
when, and if, it files a petition at the completion of the project. In 
the meantime, the Commission believes that it should act now on the 
present recommendation so the public can realize its intended benefits 
as soon as possible.

II. 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 will not have ``a 
significant economic impact on a substantial number of small 
entities,'' 5 U.S.C. 605.
    In the NPR, the Commission noted that 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 Commission concluded tentatively that the conditional 
exemption would not impose any new requirements on manufacturers of 
appliances and HVAC equipment and that, 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 stated that it 
therefore believed the impact of the conditional exemption on all 
entities within the affected industry, if any, would be de minimis.
    The Commission also stated in the NPR that, 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 believed that the impact of the proposed amendment on all 
entities within the affected industry, if any, also would be de 
minimis.
    In light of the above, the Commission certified in the NPR, 
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 was overlooked, however, the Commission 
solicited 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 expressed particular interest in comments regarding the 
effects of the conditional exemption on small businesses. The 
Commission stated that, after reviewing any comments received, it would 
determine whether it would be necessary to prepare a final regulatory 
flexibility analysis if it determined to grant the conditional 
exemption.
    Eight comments responded to the Commission's solicitation in this 
regard.\93\ Maytag said that the proposed conditional exemption would 
probably produce no economic impact on, or benefits to, small 
businesses.\94\ ARI stated that the impact of the proposal would not 
differ from small businesses to large, but that the proposal could 
potentially reduce labeling costs for both.\95\ ACEEE believed that the 
proposal would result in reduced costs to small retailers in the 
Program because they would no longer have to prepare and affix ENERGY 
STAR labels at their own expense if manufacturers were to add the 
ENERGY STAR logo at the factory. \96\ Alliance said that the proposal 
would result in cost savings for manufacturers that are small 
businesses by permitting them to display the ENERGY STAR logo on their 
products by means of only one label instead of

[[Page 17563]]

two. \97\ Finally, four commenters \98\ shared the following view, as 
expressed by DOE:

    \93\ ACEEE (4) p.2; Maytag (5) p.3; ARI (6) p.2; NRDC (7) p.5; 
OOE (11) p.4; Alliance (13) p.2; CEC (14) p.4; DOE (15) p.4.
    \94\ Maytag (5) p.3.
    \95\ ARI (6) p.2.
    \96\ ACEEE (4) p.2.
    \97\ Alliance (13) p.2.
    \98\ NRDC (7) p.5; OOE (11) p.4; CEC (14) p.4; DOE (15) p.4.
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    The proposed conditional exemption will be especially beneficial 
to small businesses which do not necessarily have a budget for 
specific promotions to correspond with the ENERGY STAR Program 
(especially in the future when the government stops creating point-
of-purchase materials). These retailers will be able to undertake 
promotions of energy efficient products at virtually no cost or 
effort.\99\

    \99\ DOE (15) p.4.
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    While most of the comments on this issue suggest that the 
conditional exemption may have beneficial results for some small 
businesses, the Commission believes that the impact of the results will 
be de minimis, because the potential savings in labeling and 
promotional costs, while helpful, will be small in comparison to the 
overall budgets of the businesses affected, and thus will not be 
``significant.''
    The Commission received no comments regarding the costs of the 
proposed amendment to include the agency's name on EnergyGuide labels. 
Thus, the Commission's conclusion in the NPR that the impact of the 
proposed amendment would be de minimis remains unchanged.
    In light of the forgoing, the Commission certifies, pursuant to 
section 605 of the RFA, that the conditional exemption and amendments 
published today will not have a significant economic effect on a 
substantial number of small entities.

IV. 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).
    In the NPR, the Commission concluded that the conditional exemption 
would not impose any new information collection requirements. To ensure 
that no additional burden was overlooked, however, the Commission 
sought public comment on what, if any, additional information 
collection burden the proposed conditional exemption would impose.
    No comments addressed this issue. The Commission maintains its 
position, therefore, that the conditional exemption will not impose any 
new information collection requirements.

List of Subjects in 16 CFR Part 305

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

V. Final Amendments

    In consideration of the foregoing, the Commission amends 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. In Sec. 305.11, paragraphs (a)(5)(i)(I), (a)(5)(ii)(H), and 
(a)(5)(iii)(H) are 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).
* * * * *
    (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).
* * * * *
    (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).
* * * * *

    3. Part 305 is amended by adding a new Sec. 305.19 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 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 who wish to place the 
ENERGY STAR logo on EnergyGuides affixed to covered products they 
manufacture that qualify for inclusion in the 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; such manufacturers may add the ENERGY STAR 
logo to labels only on those covered products that are contemplated by 
the Memorandum of Understanding.
    (3) Manufacturers that choose to avail themselves of the 
conditional exemption may print the ENERGY STAR logo on EnergyGuides 
for qualified products as part of the usual label printing process or 
may place the logo on EnergyGuides for qualified products by whatever 
means is most efficient for them, provided such placement complies with 
the requirements of paragraph (a)(4), of this section.
    (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 the sample label). 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

[[Page 17564]]

from placing the logo in a way that would obscure, detract from, alter 
the dimensions of, or touch any 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 in process black ink that 
explains the significance of the ENERGY STAR logo in ten-point 
Helvetica Condensed Black typeface. The sentence must be next to the 
logo, above the comparability bar that shows the ``least'' and ``most'' 
numbers. The sentence must read:

    ENERGY STAR A symbol of energy efficiency.

    (b) [Reserved]

    4. Appendix L is amended by revising Prototype Labels 1-5 and 
Sample Labels 1-10 and by adding Sample Label 11 to read as follows:
BILLING CODE 6750-01-P

Appendix L to Part 305--Sample Labels
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    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-7970 Filed 3-31-00; 8:45 am]
BILLING CODE 6750-01-C