[Federal Register Volume 66, Number 156 (Monday, August 13, 2001)]
[Notices]
[Pages 42534-42538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20277]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Notice.

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SUMMARY: The Federal Trade Commission (FTC) has submitted to the Office 
of Management and Budget (OMB) for review under the Paperwork Reduction 
Act (PRA) information collection requirements contained in its 
Appliance Labeling Rule (``Rule''), promulgated pursuant to the Energy 
Policy and Conservation Act of 1975 (``EPCA''). The FTC is seeking 
public comments on its proposal to extend through September 30, 2004 
the current PRA clearance for information collection requirements 
contained in the Rule. The clearance expires on September 30, 2001.

DATES: Comments must be submitted on or before September 12, 2001.

ADDRESSES: Send comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10202, Washington, DC 20503, Attn.: Desk Officer for the 
Federal Trade Commission, and to Secretary, Federal Trade Commission, 
Room H-159, 600 Pennsylvania Ave., NW., Washington, DC 20580. All 
comments should be captioned ``Appliance Labeling Rule Paperwork 
comment.''

FOR FURTHER INFORMATION CONTACT: Requests for additional information or 
copies of the proposed information collection requirements should be 
addressed to Hampton Newsome, Attorney, Bureau of Consumer Protection, 
Division of Enforcement, Room 4616, Federal Trade Commission, 600 
Pennsylvania Ave., NW., Washington, DC 20580 (202-326-2889).

SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal 
agencies must obtain approval from OMB for each collection of 
information they conduct or sponsor. On June 1, 2001, the FTC sought 
comment on the information collection requirements associated with the 
Appliance Labeling Rule, 16 CFR part 305 (Control Number: 3084-0069). 
See 66 FR 29807. No comments were received, including with regard to 
staff's PRA burden estimates. Pursuant to the OMB regulations that 
implement the PRA (5 CFR part 1320), the FTC is providing this second 
opportunity for public comment while seeking OMB approval to extend the 
existing paperwork clearance for the Rule.
    The Rule establishes testing, reporting, recordkeeping, and 
labeling requirements for manufacturers of major household appliances 
(refrigerators, refrigerator-freezers, freezers, water heaters, clothes 
washers, dishwashers, room air conditioners, furnaces, central air 
conditioners, heat pumps, pool heaters, certain lighting products, and 
certain plumbing products). The requirements relate specifically to the 
disclosure of information relating to energy consumption and water 
usage. The Rule's testing and disclosure requirements enable consumers 
purchasing appliances to compare the energy use or efficiency of 
competing models. In addition, EPCA and the Rule require manufacturers 
to submit relevant data to the Commission regarding energy or water 
usage in connection with the products they manufacture. The Commission 
uses this data to compile ranges of comparability for covered 
appliances for publication in the Federal Register. These submissions, 
along with required records for testing data, may also be used in 
enforcement actions involving alleged misstatement on labels or in 
advertisements.

Burden Statement

    Estimated annual hours burden: 445,000 hours
    The estimated hours burden imposed by section 324 of EPCA and the 
Commission's Rule include burdens for testing (338,292) hours); 
reporting (1,324 hours); recordkeeping (767 hours); labeling (101,333 
hours); and retail catalog disclosures (2,550 hours). The total burden 
for these activities is 445,000 hours (rounded to the nearest 
thousand). This estimate is lower than previous estimates because of 
revised assumptions regarding the number of basic models subjected to 
FTC-required testing each year (see discussion below).
    The following estimates of the time needed to comply with the 
requirements of the Rule are based on census data, Department of Energy 
figures and estimates, general knowledge of manufacturing practices, 
and industry input and figures. Because compliance burden falls almost 
on manufacturers and importers (with a de minimis burden for 
retailers), burden estimates are calculated on the basis of the number 
of domestic manufacturers and/or the number of units shipped 
domestically in the various product categories.

A. Testing

    Under the Rule, manufacturers of covered products must test each 
basic model they produce to determine energy

[[Page 42535]]

usage (or, in the case of plumbing fixtures water consumption). The 
burden imposed by this requirement is determined by the number of basic 
models produced, the average number of units tested per model, and the 
time required to conduct the applicable test.
    Manufacturers need not subject each basis model to testing 
annually; they must retest only if the product design changes in such 
way as to affect energy consumption. Previously, staff based its burden 
estimate on the assumption that manufacturers generally test each model 
at least once a year. Staff then conservatively assumed that this 
annual testing meant that all basic models were either replaced or 
subject to design changes during the year that necessitated testing 
under the Rule. Based on input from industry representatives for most 
manufacturer categories, however, staff now believes that the frequency 
with which models are tested every year ranges roughly between 10% and 
50% and that the actual percentage of basic models tested varies by 
appliance category. In addition, it is likely that only a small portion 
of the tests conducted is attributable to the Rule's requirements. 
Given the lack of specific data on this point, staff will 
conservatively assume that all of the tests conducted are attributable 
to the Rule's requirements and will use the high end of the range noted 
above. Accordingly, the burden estimates are based on the assumption 
that 50% of all basic models are tested annually. Thus, the estimated 
testing burden for the various categories of products covered by the 
Rule is as follows:

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                                                   Percentage of  Avg. number of    Labor hours    Total annual
    Category of manufacturer         Number of     models tested   units tested      per unit     testing burden
                                   basic models   (FTC required)     per model        tested           hours
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Refrigerators, Refrigerator-               3,075              50               2               4          12,300
 freezers, and Freezers.........
Dishwashers.....................             393              50               2               1             393
Clothes washers.................             500              50               2               2           1,000
Water heaters...................             650              50               2              24          15,600
Room air conditioners...........           1,092              50               2               8           8,736
Furnaces........................           1,900              50               2               8          15,200
Central A/C.....................           1,270              50               2              24          30,480
Heat pumps......................             903              50               2              72          65,016
Pool heaters....................             250              50               2              12           3,000
Fluorescent lamp ballasts.......             975              50               4               3           5,850
Lamp products...................           2,100              50              12              14         176,400
Plumbing fittings...............           1,700              50               2               2           3,400
Plumbing fixtures...............          22,000              50               1           .0833             917
                                                                                                 ---------------
                                                                                                         338,292
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B. Reporting

    Reporting burden estimates are based on information from industry 
representatives. Manufacturers of some products, such as appliances and 
HVAC equipment (furnaces, boilers, central air conditioners, and heat 
pumps), indicate that, for them, the reporting burden is best measured 
by the estimated time required to report on each model manufactured, 
while others, such as makers of fluorescent lamp ballasts and lamp 
products, state that an estimated number of annual burden house by 
manufacturer is a more meaningful way to measure. The figures below 
reflect these different methodologies as well as the varied burden hour 
estimates provided by manufacturers of the different product categories 
that use the latter methodology.
Appliances, HVAC Equipment, and Pool Heaters
    Staff estimates that the average reporting burden for these 
manufacturers is approximately two minutes per basic model. Based on 
this estimate, multiplied by a total of 10,033 basic models of these 
products, the annual reporting burden for the appliance, HVAC 
equipment, and pool heater industry is an estimated 334 hours (2 
minutes  x  10,033 models  60 minutes per hour).
Fluorescent Lamp Ballasts, Lamp Products, and Plumbing Products
    The total annual reporting burden for manufacturers of fluorescent 
lamp ballasts, lamp products, and plumbing products is based on the 
estimated average annual burden for each category of manufacturers, 
multiplied by the number of manufacturers in each respective category, 
as shown below:

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                                                     Annual burden                   Total annual
             Category of manufacturer                  hours per       Number of       reporting
                                                     manufacturer    manufacturers   burden hours
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Fluorescent lamp ballasts.........................               6              20             120
Lamp products.....................................              15              50             750
Plumbing products.................................               1             120             120
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Total Reporting Burden Hours

    The total reporting burden for industries covered by the Rule is 
1,324 hours annually (334+120+750+120).

C. Recordkeeping

    EPCA and the Appliance Labeling Rule require manufacturers to keep 
records of the test data generated in performing the tests to derive 
information included on labels and required by the Rule. As with 
reporting, burden is calculated by number of models for appliances, 
HVAC equipment, and pool heaters, and by number of manufacturers for 
fluorescent lamp ballasts, lamp products, and plumbing products.
Appliances, HVAC Equipment, and Pool Heaters
    The recordkeeping burden for manufacturers of appliances, HVAC 
equipment, and pool heaters varies

[[Page 42536]]

directly with the number of tests performed. Staff estimates total 
recordkeeping burden to be approximately 167 hours for these 
manufacturers, based on an estimated average of one minute per record 
stored (whether in electronic or paper format), multiplied by 10,033 
tests performed annually (1  x  10,033  60 minutes per 
hour).\1\
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    \1\ The amount of annual tests performed is derived by 
multiplying the number of basic models within the relevant product 
categories by the average number of units tested per model within 
each category (the underlying information may be drawn from the 
table in Section A).
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Fluorescent Lamp Ballasts, Lamp Products, and Plumbing Products
    The total annual recordkeeping burden for manufacturers of 
fluorescent lamp ballasts, lamp products, and plumbing products is 
based on the estimated average annual burden for each category of 
manufacturers (derived from industry sources), multiplied by the number 
of manufacturers in each respective category, as shown above:

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                                                                   Annual burden                   Total annual
                    Cartegory of manufacturer                        hours per       Number of     recordkeeping
                                                                   manufacturer    manufacturers   burden hours
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Fluorescent lamp ballasts.......................................               2              20              40
Lamp products...................................................              10              50             500
Plumbing products...............................................              .5             120              60
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Total Recordkeeping Burden Hours
    The total recordkeeping burden for industries covered by the Rule 
is 767 hours annually (167+40+500+60).

D. Labeling

    EPCA and the Rule require that manufacturers of covered products 
provide certain information to consumers, through labels, fact sheets, 
or permanent markings on the products. The burden imposed by this 
requirement consists of (1) the time needed to prepare the information 
to be provided, and (2) the time needed to provide it, in whatever 
form, with the products. The applicable burden for each category of 
products is described below:
Appliances, HVAC Equipment, and Pool Heaters
    EPCA and the Rule specify the content, format, and specifications 
for the required labels, so manufacturers need only add the energy 
consumption figures derived from testing. In addition, most larger 
companies use automation to generate labels, and the labels do not 
change from year to year. Given these considerations, staff estimates 
that the time to prepare labels for appliances, HVAC equipment, and 
pool heaters is no more than four minutes per basic model. Thus, for 
appliances, HVAC equipment, and pool heaters, the approximate annual 
drafting burden involved in labeling in 669 hours per year (10,033 (all 
basic models)  x  four minutes (drafting time per basic model)  
60 (minutes per hour)).
    Industry representatives and trade associations have estimated that 
it takes between 4 and 8 seconds to affix each label to each product. 
Based on an average of six seconds per unit, the annual burden for 
affixing labels to appliances, HVAC equipment, and pool heaters is 
83,522 hours [six (seconds)  x  50,113,098 (the number of total 
products shipped in 2000) divided by 3,600 (seconds per hour)].
    The Rule also requires that HVAC equipment manufacturers disclose 
energy usage information on a separate fact sheet or in an approved 
industry-prepared directory of products. Staff has estimated the 
preparation of these fact sheets requires approximately 30 minutes per 
basic model. Manufacturers producing at least 95 percent of the 
affected equipment, however, are members of trade associations \2\ that 
produce approved directories (in connection with their certification 
programs independent of the Rule) that satisfy the fact sheet 
requirement. Thus, the drafting burden for fact sheets for HVAC 
equipment is approximately 102 hours annually [4,073 (all basic models) 
 x  .5 hours  x  .05 (proportion of equipment for which fact sheets are 
required)].
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    \2\ These associations include the Air-Conditioning and 
Refrigeration Institute, the Gas appliance Manufacturers 
Association, and the Hydronics Institute.
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    The Rule allows manufacturers to prepare a directory containing 
fact sheet information for each retail establishment as long as there 
is a fact sheet for each basis model sold. Assuming that six HVAC 
manufacturers (i.e., approximately 5% of HVAC manufacturers), produce 
fact sheets instead of having required information shown in industry 
directories, and each spends approximately 16 hours per year 
distributing the fact sheets to retailers and in response to occasional 
consumer requests, the total time attributable to this activity would 
also be approximately 96 hours.
    The total annual labeling burden for appliances, HVAC equipment, 
and pool heaters is 668 hours for preparation plus 83,522 hours for 
affixing, or 84,191 hours. The total annual fact sheet burden is 102 
hours for preparation and 96 hours for distribution, or 198 hours. The 
total annual burden for labels and fact sheets for the appliance, HVAC, 
and pool heater industries is, therefore, estimated to be 84,389 hours 
(84,191+198).
Fluorescent Lamp Ballasts
    The statute and the Rule require that labels for fluorescent lamp 
ballasts contain an ``E'' within a circle. Since manufacturers label 
these ballasts in the ordinary course of business, the only impact of 
the Rule is to require manufacturers to reformat their labels to 
include the ``E'' symbol. Thus, the burden imposed by the Rule for 
labeling fluorescent lamp ballasts is minimal.
Lamp Products
    The burden attributable to labeling lamp products is also minimal, 
for similar reasons. The Rule requires certain disclosures on packaging 
for lamp products. Since manufacturers were already disclosing the 
substantive information required under the Rule prior to its 
implementation, the practical effect of the Rule was to require that 
manufacturers redesign packaging materials to ensure they include the 
disclosures in the manner and form prescribed by the Rule. Because this 
effort is now complete, there is no ongoing labeling burden imposed by 
the Rule for lamp products.
Plumbing Products
    The statute and the Rule require that manufacturers disclose the 
water flow rate for plumbing fixtures. Manufacturers may accomplish 
this disclosure by attaching a label to the product, through permanent 
markings imprinted on the product as part of the manufacturing process, 
or by including

[[Page 42537]]

the required information on packaging material for the product. While 
some methods might impose little or no additional incremental time 
burden and cost on the manufacturer, other methods (such as affixing 
labels) could. Thus, staff estimate an overall blended average burden 
associated with this disclosure requirement of one second per unit 
sold. Staff also estimates that there are approximately 9,000,000 
covered fixtures and 52,000,000 fittings sold annually in the country. 
Therefore, the estimated annual burden to label plumbing products is 
16,944 hours [61,000,000 (units)  x  1 (seconds)  3,600 
(seconds per hour)].

Total Burden for Labeling

    The total labeling burden for all industries covered by the Rule is 
100,333 hours (84,389 + 16,944) annually.

E. Retail Sales Catalogs Disclosures

    The Rule requires that sellers offering covered products through 
retail sales catalogs (i.e., those publications from which a consumer 
can actually order merchandise) disclose in the catalog energy (or 
water) consumption for each covered product. Because this information 
is supplied by the product manufacturers, the burden on the retailer 
consists of incorporating the information into the catalog 
presentation.
    In the past, staff has estimated that there are 100 sellers who 
offer covered products through paper retail catalogs. While the Rule 
initially imposed a burden on catalog sellers by requiring that they 
draft disclosures and incorporate them into the layouts of their 
catalogs, paper catalog sellers now have substantial experience with 
the Rule and its requirements. Energy and water consumption information 
has obvious relevance to consumers, so sellers are likely to disclose 
much of the required information with or without the Rule. Accordingly, 
given the small number of catalog sellers, their experience with 
incorporating energy and water consumption data into their catalogs, 
and the likelihood that many of the required disclosures would be made 
in the ordinary course of business, staff believes that any incremental 
burden the Rule imposes on these paper catalog sellers would be 
minimal.
    Staff estimates that there are an additional 150 new online sellers 
of covered products who are subject to the Rule's catalog disclosure 
requirements. Many of these sellers may not have the experience the 
paper catalog sellers have in incorporating energy and water 
consumption data into their catalogs. Staff estimates that these online 
sellers each require approximately 17 hours per year to incorporate the 
data into their online catalogs. This estimate is based on the 
assumption that entry of the required information takes 1 minute per 
covered product and an assumption that the average online catalog 
contains approximately 1,000 covered products (based on a sampling of 
websites of affected retailers). Given that there is a great variety 
among sellers in the volume of products they offer online, it is very 
difficult to estimate such volume with precision. In addition, this 
analysis assumes that information for all 1,000 products is entered 
into the catalog. This is a conservative assumption because the number 
of incremental additions to the catalog from year to year is likely to 
be much lower after initial start-up efforts have been completed. The 
total catalog disclosure burden for all industries covered by the Rule 
is 2,550 hours (150 sellers  x  17 hours annually.
    Estimated annual cost burden: ($7,826,750 in labor costs and 
$3,519,422 in capital or other non-labor costs)
    Labor Costs: Staff derived labor costs by applying appropriate 
estimated hourly cost figures to the burden hours described above. In 
calculating the cost figures, staff assumes that test procedures are 
conducted by skilled technical personnel at an hourly rate of $20.00, 
and that recordkeeping and reporting, and labeling, marking, and 
preparation of facts sheets, generally are performed by clerical 
personnel at an hourly rate of $10.00.
    Based on the above estimates and assumptions, the total annual 
labor costs for the five different categories of burden under the Rule, 
applied to all the products covered by it, is $7,827,000 (rounded to 
the nearest thousand), derived as follows:

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                                                 Burden hours                                      Total annual
                   Activity                        per year         Wage category/hourly rate       labor cost
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Testing.......................................         338,292  Skilled clerical/$20............      $6,765,840
Reporting.....................................           1,324  Clerical/$10....................          13,240
Recordkeeping.................................             934  Clerical/$10....................           9,340
Labeling, marking, and fact sheet preparation.         101,333  Clerical/$10....................       1,013,330
Catalog disclosures...........................           2,550  Clerical/$10....................          25,500
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                                                                                                       7,827,250
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    Capital or Other Non-Labor Costs: $3,519,000 (rounded), determined 
as follows:
    Staff has examined the five distinct burdens imposed by EPCA 
through the Rule--testing, reporting, recordkeeping, labeling, and 
retail catalog disclosures--as they affect the 11 groups of products 
that the Rule covers. Staff concludes that there are no current start-
up costs associated with the Rule. Manufacturers have in place the 
capital equipment necessary--especially equipment to measure energy 
and/or water usage--to comply with the Rule.
    Under this analysis, testing, recordkeeping, and retail catalog 
disclosures are activities that incur no capital or other non-labor 
costs. As mentioned above, testing has been performed in these 
industries in the normal course of business for many years as has the 
associated recordkeeping. The same is so for regarding compliance 
applicable to the requirements for paper catalogs. Manufacturers and 
retailers who make required disclosures in catalogs already are 
producing catalogs in the ordinary course of their businesses; 
accordingly, capital cost associated with such disclosure would be 
minimal or nil. Staff recognizes that there may be initial costs 
associated with posting online disclosure, and it invites further 
comment to reasonably quantify such costs.
    Manufacturers that submit required reports to the Commission 
directly (rather than through trade associations) incur some nominal 
costs for paper and postage. Staff estimates that these costs do not 
exceed $2,500. Manufacturers must also incur the cost of procuring 
labels and fact sheets used in compliance with the Rule. Based on 
estimates of 50,113,098 units shipped

[[Page 42538]]

and 128,650 fact sheets prepared,\3\ at an average cost of seven cents 
for each label or fact sheet, the total (rounded) labeling cost is 
$3,516,922.
    The total cost for labeling, marking and preparing fact sheets for 
all industries covered by the Rule is, therefore, $3,519,422 annually 
($43,516,922 + $2,500), rounded to $3,519,000.
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    \3\ The units shipped total is based on combined actual or 
estimated industry figures for calendar year 2000 across all of the 
product categories, except for fluorescent lamp ballasts, lamp 
products, and plumbing products. Staff has determined that, for 
those product categories, these are little or no costs associated 
with the labeling requirements. The fact sheet estimation is based 
on the previously noted assumption that five percent of HVAC 
manufacturers produce fact sheets on their own. Based on total HVAC 
units shipped (10,291,965), five percent amounts to 514,598 HVAC 
units. Because manufacturers generally list more than one unit on a 
fact sheet, staff has estimated that manufacturers independently 
preparing them will use one sheet for every four of these 514,598 
units. Thus, staff estimates that HVAC manufacturers produce 
approximately 128,650 fact sheets.

John D. Graubert,
Acting General Counsel.
[FR Doc. 01-20277 Filed 8-10-01; 8:45 am]
BILLING CODE 6750-01-M