[Federal Register Volume 73, Number 48 (Tuesday, March 11, 2008)]
[Proposed Rules]
[Pages 12916-12923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-4699]



[[Page 12916]]

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FEDERAL TRADE COMMISSION

16 CFR Part 306

RIN 3084-AA45


Automotive Fuel Ratings, Certification and Posting

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

ACTION: Notice of proposed rulemaking; request for public comment.

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SUMMARY: Section 205 of the Energy Independence and Security Act of 
2007 requires the Federal Trade Commission to promulgate biodiesel 
labeling requirements. In accordance with this directive, the FTC is 
publishing proposed amendments to its rule for ``Automotive Fuel 
Ratings, Certification, and Posting'' (``Fuel Rating Rule'' or 
``Rule''). The Commission is seeking comment on proposed changes to the 
Rule.

DATES: Written comments must be received on or before April 7, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Proposed Rule for Biodiesel Labeling, Matter 
No. R811005'' to facilitate the organization of comments. A comment 
filed in paper form should include this reference both in the text and 
on the envelope, and should be mailed or delivered to the following 
address: Federal Trade Commission/Office of the Secretary, Room H-159 
(Annex F), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. 
Comments containing confidential material must be filed in paper form, 
and the first page of the document must be clearly labeled 
``Confidential'' and must comply with Commission Rule 4.9(c).\1\ The 
FTC is requesting that any comment filed in paper form be sent by 
courier or overnight service, if possible, because U.S. postal mail in 
the Washington area and at the Commission is subject to delay due to 
heightened security precautions.
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    \1\ Any request for confidential treatment, including the 
factual and legal basis for the request, must accompany the comment 
and must identify the specific portions of the comment to be 
withheld from the public record. The request will be granted or 
denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by clicking 
on the following: https://secure.commentworks.com/ftc-biodiesel and 
following the instructions on the web-based form. To ensure that the 
Commission considers an electronic comment, you must file it on the 
web-based form at https://secure.commentworks.com/ftc-biodiesel. You 
also may visit http://www.regulations.gov to read this proposed Rule, 
and may file an electronic comment through that website. The Commission 
will consider all comments that regulations.gov forwards to it.
    Comments on any proposed filing, recordkeeping, or disclosure 
requirements that are subject to paperwork burden review under the 
Paperwork Reduction Act should also be submitted to: Office of 
Information and Regulatory Affairs, Office of Management and Budget 
(``OMB''), Attention: Desk Officer for Federal Trade Commission. 
Comments should be submitted via facsimile to (202) 395-6974 because 
U.S. postal mail at OMB is subject to delays due to heightened security 
precautions.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at http://www.ftc.gov. As a matter 
of discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
    Because written comments appear adequate to present the views of 
all interested parties, the Commission has not scheduled an oral 
hearing for these amendments. Interested parties may request an 
opportunity to present views orally. If such a request is made, the 
Commission will publish a document in the Federal Register, stating the 
time and place for such oral presentation(s) and describing the 
procedures that will be followed. Interested parties who wish to 
present oral views must submit, on or before March 24, 2008, a written 
comment that describes the issues on which the party wishes to speak. 
If there is no oral hearing, the Commission will base its decision on 
the written rulemaking record.

FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889, or 
Matthew Wilshire, (202) 326-2976, Attorneys, Division of Enforcement, 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue, N.W., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Section 205 of the Energy Independence and 
Security Act of 2007 (``EISA'' or the ``Act'') (Pub. L. 110-140) 
requires the Commission to promulgate biodiesel labeling requirements 
within 180 days of the law's passage. The Act addresses three 
categories of biodiesel blends and sets out prescriptive requirements 
for labeling two of them. The Act also contains definitions for the 
terms ``biomass-based diesel,'' ``biodiesel,'' and ``biomass-based 
diesel and biodiesel blends'' (hereinafter referred to collectively as 
``biodiesel fuels''). In response to this statutory directive, the 
Commission is proposing amendments to the Fuel Rating Rule (16 CFR Part 
306) to incorporate these Congressionally mandated labeling 
requirements. Under the amendments, the rating and certification 
requirements of the existing rule apply to biodiesel fuels. This Notice 
provides background on the Fuel Rating Rule, a short description of 
biodiesel, information about the new statutory requirements for 
biodiesel fuel labeling contained in EISA, and a detailed description 
of the proposed requirements for the labeling of biodiesel fuels at 
fuel pumps.

I. The Fuel Rating Rule

    The Commission first promulgated the Fuel Rating Rule (then titled 
the ``Octane Certification and Posting Rule'') in 1979 in accordance 
with the Petroleum Marketing Practices Act (``PMPA'') (15 U.S.C. Sec.  
2821 et seq.).\2\ In response to amendments to the PMPA, the Commission 
expanded the scope of the Fuel Rating Rule in 1993 to cover liquid 
alternative fuels such as ethanol and liquefied natural gas (58 FR 
41356 (Aug. 3, 1993)). The PMPA gives the Commission authority to 
designate methods for fuel rating, fuel certification, and posting for 
fuels at the point of sale. See 15 U.S.C. Sec.  2822. The PMPA defines 
automotive fuel broadly to include ``liquid fuel of a type distributed 
for use as a fuel in any motor vehicle.'' The coverage of the Fuel 
Rating Rule is consistent with the PMPA and covers any alternative 
liquid fuel distributed for use in any motor vehicle including, but 
``not limited to,'' methanol, denatured ethanol, liquefied

[[Page 12917]]

natural gas, and coal-derived liquid fuels.\3\
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    \2\ In accordance with section 203(d)(1) of the PMPA (15 U.S.C. 
Sec.  2823(d)(1)), this proceeding is being conducted pursuant to 
section 553 of the Administrative Procedure Act (5 U.S.C. Sec.  
553), except that interested person are being afforded the 
opportunity to present oral, as well as written, data, views and 
arguments.
    \3\ In 1993, the Commission explained that ``[t]he Fuel Rating 
Rule . . . applies to all present and future alternative liquid 
automotive fuels.'' 58 FR 41355, 41358 (Aug. 3, 1993).
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II. Biodiesel Fuels

    ``Biodiesel,'' as defined by EISA, is a diesel fuel produced by 
using alcohol to transform animal fat or vegetable oil into automotive 
fuel. Specifically, EISA (Pub. L. 110-140, Sec.  205(c)) defines 
``biodiesel'' to mean ``the monoalkyl esters of long chain fatty acids 
derived from plant or animal matter that meet: (1) the registration 
requirements for fuels and fuel additives under this section;\4\ and 
(2) the requirements of ASTM [American Society for Testing and 
Materials] standard D6751.''\5\ Biodiesel serves as a substitute for 
diesel fuel for some diesel vehicles and is usually blended with diesel 
for sale at retail pumps. According to the Department of Energy, 
biodiesel in the U.S. is usually made from soybean oil or recycled 
restaurant grease. Estimates suggest that biodiesel sales increased 
from 15 million gallons in 2002 to 250 million gallons in 2006.\6\ In 
addition to biodiesel, EISA contains requirements for ``biomass-based 
diesel,'' defined as a diesel fuel substitute produced from 
nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under 42 U.S.C. Sec.  7545.\7\ Finally, 
EISA (Sec.  205(c)(4)) defines ``biomass-based diesel and biodiesel 
blends'' to mean a ``blend of `biomass-based diesel' or `biodiesel' 
fuel that is blended with petroleum based diesel fuel.''
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    \4\ Though EISA's definition of ``biodiesel'' refers to the 
registration requirements for fuels and fuel additives under ``this 
section,'' there are no such registration requirements in section 
205 of EISA nor are there any in the FTC's Fuel Rating Rule (16 CFR 
Part 306). Accordingly, we assume the phrase ``this section'' in 
EISA's definition of ``biodiesel'' is intended to refer to the 
Environmental Protection Agency's (``EPA's'') registration 
requirements for fuels and fuel additives (40 CFR Part 79 
``Registration of Fuels and Fuel Additives'') issued pursuant to 42 
U.S.C. Sec.  7545. Those requirements constitute EPA's regulatory 
program for the registration of motor vehicle diesel fuel (including 
biodiesel), motor vehicle gasoline, and their additives. Therefore 
the definition of ``biodiesel'' in the proposed Rule references the 
requirements of 40 CFR Part 79.
    \5\ ASTM D6751 is titled: ``Standard Specification for Biodiesel 
Fuel Blend Stock (B100) for Middle Distillate Fuels.''
    \6\ See http://www1.eere.energy.gov/biomass/renewable_diesel.html (2002 estimate) and http://www.biodiesel.org/pdf_files/fuelfactsheets/Biodiesel_Sales_Graph.pdf (2006 estimate).
    \7\ EISA defines ``biomass-based diesel'' by referencing the 
definition of the term ``biodiesel'' provided in Section 312(f) of 
the Energy Policy Act of 1992 (42 U.S.C. Sec.  13220(f)). The 
definition reads: ``a diesel fuel substitute produced from 
nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under [42 U.S.C. Sec.  7545],'' and 
includes fuel derived from ``(i) animal wastes, including poultry 
fats and poultry wastes, and other waste materials; or (ii) 
municipal solid waste and sludges and oils derived from wastewater 
and the treatment of wastewater.'' 42 U.S.C. Sec.  13220(f)(1)(A) 
and (B).
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    Though the FTC has never specifically addressed fuel labeling 
requirements for biodiesel fuels, the broad authority under the PMPA 
allows the Commission to include those fuels under the rating, 
certification, and posting requirements of the Fuel Rating Rule. Given 
Congress's specific directive in EISA to promulgate biodiesel fuel 
labeling requirements, we now are proposing to amend the Fuel Rating 
Rule to include biodiesel fuels in accordance with the directive of 
EISA.\8\
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    \8\ The Fuel Rating Rule currently does not specify labeling 
requirements for petroleum-based diesel. See 58 FR 41356, 41368 
(Aug. 3, 1993). We are not proposing such requirements for diesel 
fuel as part of this proceeding.
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III. EISA's Directive

    EISA (Pub. L. 110-140, Sec.  205(a)) states that ``[e]ach retail 
diesel fuel pump shall be labeled in a manner that informs consumers of 
the percent of biomass-based diesel or biodiesel that is contained in 
the biomass-based diesel blend or biodiesel blend that is offered for 
sale, as determined by the Federal Trade Commission.'' EISA also 
addresses three different categories of biodiesel fuel blends, 
requiring labels with specific wording on biodiesel fuel pumps for two 
of them. For fuel blends containing five percent or less biodiesel fuel 
that meet ASTM D975 (``Standard Specification for Diesel Fuel Oils''), 
no specific label is required.\9\ For fuel blends between five and no 
more than twenty percent, EISA (Pub. L. 110-140, Sec.  205(b)(2)) 
requires the label to state that the fuel blend ``contains biomass-
based diesel or biodiesel in quantities between 5 percent and 20 
percent.'' For fuel blends that contain more than twenty percent 
biodiesel or biomass-based diesel, the statute (Pub. L. 110-140, Sec.  
205(b)(3)) mandates that the label state that the fuel blend ``contains 
more than 20 percent biomass-based diesel or biodiesel.''
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    \9\ EISA states that fuel in this category ``shall not require 
any additional labels.'' Pub. L. 110-140, Sec.  205(b)(1). This 
appears to mean that biodiesel and biomass-based diesel blends at 
five percent or less do not require any specific label identifying 
the product as biodiesel but that any labels otherwise applicable to 
such diesel fuel will continue to apply.
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    Although Section 205 of EISA furnishes precise, mandatory label 
language, the Act (Pub. L. 110-140, Sec.  205(a)) does leave the FTC 
with discretion to determine the specific size, layout, and color of 
the required label, as well as to require any additional wording 
necessary to ``inform consumers of the percent of biomass-based diesel 
or biodiesel that is contained in the biomass-based diesel or biodiesel 
blend that is offered for sale.''

IV. Proposed Revisions to the Fuel Rating Rule

    Consistent with the provisions of EISA, the Commission is proposing 
to amend the Fuel Rating Rule. These changes: 1) incorporate the 
definitions for the terms ``biomass-based diesel,'' ``biodiesel,'' and 
``biomass-based diesel and biodiesel blends'' contained in Section 205 
of EISA; 2) amend the definition of ``automotive fuel'' to make clear 
that biodiesel fuels are subject to the rating and certification 
requirements of the Fuel Rating Rule; and 3) require labeling of 
biodiesel fuels containing more than five percent biomass-based diesel 
or biodiesel that is consistent with the Congressionally mandated 
language in Section 205 of EISA and with state model rules proposed by 
the National Conference on Weights and Measures (``NCWM'').

A. Definitions

    As noted above, Section 205 of EISA requires the Commission to 
promulgate labeling requirements for ``biomass-based diesel,'' 
``biodiesel,'' and ``biomass-based diesel and biodiesel blends,'' as 
those terms are defined in the Section 205(c) of the statute. The 
Commission, therefore, proposes adding the statutorily required terms 
to Section 306.0 of the Fuel Rating Rule.

B. Alternative Fuels, Automotive Fuel Rating, and Certification

    Section 306.0(i)(2) of the Rule currently lists examples of 
alternative fuels, but specifically states that alternative fuels are 
``not limited to'' those listed. The proposed amendments expressly add 
biomass-based diesel and biodiesel, as well as blends containing more 
than five percent biodiesel or biomass-based diesel, to this non-
exclusive list. By specifically including these terms, the amendments 
clarify that biodiesel fuels are covered by the rating and 
certification requirements of Part 306 of the Rule.\10\
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    \10\ Consistent with EISA (Pub. L. 110-140, Sec.  205(b)(1)), 
the amendments to Section 306.0 would also indicate that biodiesel 
blends that contain less than or equal to five percent biomass-based 
diesel or biodiesel by volume, and that meet ASTM D975, are not 
automotive fuels covered by the requirements of this Rule.
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    Incorporating biodiesel fuels into the Fuel Rating Rule and 
subjecting them to

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these rating and certification requirements will help ensure the 
accuracy of the information on biodiesel fuel labels. The current 
rating requirements in Section 306.5 and the certification procedures 
in Section 306.6 provide the means to substantiate fuel ratings 
throughout the chain of sale. Under the current Rule, refiners, 
importers, producers, and distributors of alternative liquid automotive 
fuels must have ``competent and reliable evidence'' supporting their 
advertised fuel rating (Sec. 306.5(b) and Sec. 306.8(b)). In addition, 
sellers must certify that percentage when they transfer the fuel to 
anyone other than a consumer (Sec. 306.6 and Sec. 306.8(c)). The 
proposed amendments will ensure that these requirements apply to 
biodiesel fuels sold at retail pumps.\11\
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    \11\ It is the responsibility of any entity rating biodiesel 
blends under Section 306.5 to determine the amount of biodiesel in 
the fuel it sells. This includes the need to account for biodiesel 
in any diesel fuel it uses to create such blends (e.g., diesel fuel 
containing biodiesel at five percent or less).
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    Finally, to comply with EISA's labeling requirements, the proposed 
amendments make minor changes to the rating and certification 
provisions of the Rule for biodiesel fuel blends. First, the amendments 
would modify certain language in the Rule's certification provision 
(Sec. 306.5(b)) to clarify that biodiesel fuel blends should be rated 
by the percentage of biodiesel or biomass-based diesel in the fuel, not 
necessarily by the percentage of the principal component of the fuel as 
is the case with other alternative fuels.\12\ Second, the certification 
requirements in Section 306.6(b) currently allow transferors of 
alternative automotive fuels to certify fuel ratings with a letter of 
certification and provide that this letter remains valid so long as the 
fuel transferred contains the same or a greater rating of the principal 
component. However, an increase in the concentration of biodiesel or 
biomass-based diesel in an automotive fuel may trigger different 
labeling requirements under EISA if the increase moves the fuel into a 
different blend category (e.g., an increase from B-15 to B-30). 
Therefore, the proposed amendment to Section 306.6(b) states that if 
transferors of biodiesel fuels choose to use a letter of certification, 
that letter will be valid only as long as the fuel transferred contains 
the same percentage of biodiesel or biomass-based diesel as previous 
fuel transfers covered by the letter.
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    \12\ For example, a twenty-five percent biodiesel blend should 
be rated as twenty-five percent biodiesel, not seventy-five percent 
diesel.
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C. Labeling

    The labeling or ``posting'' requirements in the proposed amendments 
employ the language mandated by Congress in EISA and are consistent 
with the content and format of existing labels for other alternative 
fuels such as ethanol and propane. In accordance with Section 205 of 
EISA and consistent with the FTC's authority under the PMPA, the 
proposed Rule addresses three biodiesel blend fuel categories. First, 
the proposed Rule does not require labels for biodiesel fuels 
containing no more than five percent biomass-based diesel or biodiesel, 
provided that they meet the specifications for diesel fuel contained in 
ASTM D975. Second, for biodiesel fuel blends of more than five percent 
but not more than twenty percent biomass-based diesel and biodiesel, 
the proposed label contains the language required by Congress in 
Section 205(b)(2) of EISA and additional disclosures as discussed 
below. Third, for biodiesel fuels containing more than twenty percent, 
the proposed label contains the language required by Congress in 
Section 205(b)(3) of EISA. In addition, pursuant to our authority under 
the PMPA and consistent with EISA's direction, the proposed amendments 
specify a label for neat biodiesel (i.e., 100 percent biodiesel or ``B-
100'').
    In addition to the specific disclosures required by EISA, the 
proposed labels contain fuel terms on the top of the label that are 
consistent with both the draft model rules proposed by the NCWM and the 
Fuel Rating Rule's treatment of other alternative fuels. Specifically, 
the proposed labels for biodiesel fuels containing more than five but 
no more than twenty percent biomass-based diesel or biodiesel require 
at the top of the label either: 1) the capital letter ``B'' followed 
first by a numeric representation of the percentage of biodiesel or 
biomass-based diesel and then by the term ``biodiesel blend,'' such as 
``B-20 Biodiesel Blend''; or 2) the term ``Biodiesel Blend.''\13\ For 
biodiesel fuel blends containing more than twenty percent, the proposed 
labels require the specific blend designation (e.g., ``B-80'') of the 
fuel followed by the term ``biodiesel blend,'' such as ``B-80 Biodiesel 
Blend.'' For neat biodiesel (i.e., B-100), the label requires the words 
``B-100 Biodiesel'' along with the explanatory text ``contains 100 
percent biomassed-based diesel or biodiesel.'' Inclusion of these terms 
on the proposed label is consistent with draft model rules currently 
under consideration by the NCWM.\14\ It is also consistent with the 
Fuel Rating Rule's labels for other alternative fuels, which must 
disclose the type of alternative fuel at the top of the label (e.g., 
``E-85'' for eighty-five percent ethanol blends).
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    \13\ The choice of designation (e.g., ``B-15 Biodiesel Blend'' 
or ``Biodiesel Blend'') is at the discretion of the seller. Giving 
sellers this choice is consistent with the model rules under 
consideration by the NCWM and with Section 205 of EISA, which 
require disclosure only that the fuel contains between five and 
twenty percent biodiesel or biomass-based diesel, rather than a 
specific amount.
    \14\ See ``National Conference on Weights and Measures Laws and 
Regulations Committee & Petroleum Subcommittee Interim Meeting for 
the 93rd NCWM Annual Conference; Supplement to NCWM Publication 
15,'' (Section 3.15).
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    Consistent with the model rules under consideration by the NCWM, 
the proposed Rule allows pump labels for biodiesel fuel blends from 
more than five to twenty percent biomass-based diesel and biodiesel to 
contain the generic term ``biodiesel blend'' without specifying the 
percentage of biodiesel or biomass-based diesel fuel. Under this 
approach, sellers have the flexibility to provide specific percentages 
in this blend category but are not required to do so. It is our 
understanding that the blend categories set by Congress and recommended 
by the NCWM (i.e., no greater than five percent, greater than five 
percent but no more than twenty percent, and greater than twenty 
percent) reflect thresholds that are important with regard to engine 
compatibility and vehicle warranties. For example, many original 
equipment manufacturers and customer service departments do not 
recommend use of biodiesel fuel blends over five percent for many 
vehicles.\15\ For some vehicles, however, consumers can use blends of 
twenty percent or less biodiesel or biomass-based diesel without 
triggering engine compatibility or warranty concerns.\16\ Accordingly, 
a precise percentage (e.g., ``B-10'') on the label may not be necessary 
for the more than five to twenty percent category as long as the label 
clearly indicates that the fuel, in fact, contains more than five but 
no greater than twenty percent.
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    \15\ See, e.g., ``OEM Warranty Statements and Use of Biodiesel 
Blends over 5% (B5),'' National Biodiesel Board, available at: 
http://www.biodiesel.org/pdf_files/B5_warranty_statement_32206.pdf.
    \16\ Id.
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    With respect to blends above twenty percent, it is our 
understanding that these fuels are infrequently sold at retail and that 
customers purchasing such fuels are more likely to be concerned about 
applicable percentages.\17\
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    \17\ See ASTM D6751, Note 2 (``A considerable amount of 
experience exists in the U.S. with a 20% blend of biodiesel . . . . 
Although biodiesel (B100) can be used, blends of over 20% biodiesel 
with diesel fuel . . . should be evaluated on a case by case basis 
until further experience is available.'').

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[[Page 12919]]

    Therefore, a requirement for specific percentages appears to be 
warranted for this category. We seek comments on these issues. In 
particular, should the Rule allow such a non-specific percentage 
designation (``biodiesel blend'') for fuel between more than five and 
twenty percent, or should the Rule require on the label specific 
percentages for all blends over five percent? Additionally, should 
blends over twenty percent allow a generic term on the label in lieu of 
a specific percentage designation on the label?
    The proposed rule language sets forth the specific size, font, and 
format requirements for the draft labels. These requirements are 
consistent with those in place for other alternative liquid fuels in 
the Rule (see Sec. 306.12). In one departure from existing 
requirements, we are proposing a purple (PMS\18\ 2562 or its 
equivalent) background for all biodiesel fuel labels. The purple 
background is designed to allow retail consumers to distinguish 
biodiesel fuels easily from other fuels sold at retail pumps such as 
gasoline (yellow octane label) and E-85 (orange label) and helps 
minimize the likelihood that consumers will use the wrong fuel in their 
vehicle. The Commission invites comment on whether the proposed color 
is appropriate. Sample illustrations of biodiesel fuel labels can be 
found in the proposed amendments at Section 306.12(f).
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    \18\ Pantone Matching System. We are also proposing conforming 
changes to allow the use of non Pantone equivalents for other 
alternative fuels.
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V. Questions for Comment

    The Commission seeks comments on all aspects of the proposed rule. 
All comments should be filed as prescribed in the ``ADDRESSES'' section 
above, and must be received on or before April 7, 2008. In addition to 
any questions and requests for comment found throughout this Notice, we 
ask that commenters address the following questions:
    (1)What costs or burdens, or any other impacts, do the proposed 
requirements impose, and on whom? What evidence supports the asserted 
costs, burdens, or other impacts?
    (2)What modifications, if any, should be made to the proposed 
requirements to increase their benefits to consumers?
     (a)What evidence supports your proposed modifications? Please 
submit any such evidence.
     (b)How would these modifications affect the costs and benefits of 
the proposed requirements for consumers?
     (c)How would these modifications affect the costs and benefits of 
the proposed requirements for businesses, and in particular small 
businesses?
    (3)What modifications, if any, should be made to the proposed 
requirements to decrease their burdens on businesses?
     (a)What evidence supports your proposed modifications? Please 
submit any such evidence.
     (b)How would these modifications affect the costs and benefits of 
the proposed requirements for consumers?
     (c)How would these modifications affect the costs and benefits of 
the proposed requirements for businesses, and in particular small 
businesses?
    (4)Should the Rule allow a non-specific percentage designation 
(``biodiesel blend'') for biodiesel blends over five and no more than 
twenty percent? Or should the Rule require specific percentages on the 
label for all blends over five percent? If so, why and how? If not, why 
not? What evidence supports your answer(s)? Please submit any such 
evidence.
    (5)Should the Rule require a specific designation (e.g. ``B-80'') 
for biodiesel blends over twenty percent? Or, should the Rule allow a 
generic designation for such blends? If so, why and how? If not, why 
not? What evidence supports your answer(s)? Please submit any such 
evidence.
    (6)Of fuels containing biodiesel sold in the United States, 
approximately what percentage contains no more than five percent 
biodiesel? What percentage contains more than five and no more than 
twenty percent biodiesel? What percentage contains more than twenty 
percent biodiesel? What evidence supports your answer(s)? Please submit 
any such evidence.
    (7)Of fuels containing biomass-based diesel sold in the United 
States, approximately what percentage contains no more than five 
percent biomass-based diesel? What percentage contains more than five 
and no more than twenty percent biomass-based diesel? What percentage 
contains more than twenty percent biomass-based diesel? What evidence 
supports your answer(s)? Please submit any such evidence.
    (8)Is purple (PMS 2562) an appropriate background color for the 
biodiesel blend and biodiesel label? If not, what color would be 
appropriate? What evidence supports your answer(s)? Please submit any 
such evidence. In lieu of a purple label, should the FTC consider a 
blue label (PMS 277)?
    (9)Would the Commission' s proposed biodiesel label cause confusion 
with regard to any label currently used for diesel (or any other fuel) 
at retail pumps? If so, how? Are there any changes that the Commission 
could make to its proposal to eliminate such confusion in a manner that 
also complies with Congress's directive? What evidence supports your 
conclusions?

VI. Paperwork Reduction Act

    The proposed certification and labeling requirements constitute a 
``collection of information'' under the Paperwork Reduction Act of 1995 
(44 U.S.C. Sec. Sec.  3501-3520) (``PRA''). Consistent with the Fuel 
Rating Rule's requirements for other alternative fuels, the proposed 
amendments require refiners, producers, importers, distributors, and 
retailers of biodiesel fuels to retain, for one year, records of any 
delivery tickets, letters of certification, or tests upon which they 
based the automotive fuel ratings that they certify or post. The 
covered parties also must make these records available for inspection 
by Commission and Environmental Protection Agency staff or by persons 
authorized by the Commission or the Environmental Protection Agency. 
Finally, retailers must produce, distribute, and post fuel rating 
labels on fuel pumps. Therefore, the Commission will submit the 
proposed requirements to OMB for review under the PRA before issuing a 
final rule.
    The Commission has previously estimated the burden associated with 
the Rule's recordkeeping requirements for the sale of automotive fuels 
to be no more than five minutes per year per industry member, and it 
has previously estimated the burden associated with the Rule's 
disclosure requirements to be no more than 1/8th of an hour per year 
per industry member. The recordkeeping ``burden,'' for OMB purposes, 
does not include efforts that a covered party would expend in any 
event. 5 CFR 1320.3(b)(2). Therefore, the estimated burden for the Fuel 
Rating Rule does not include recordkeeping in which covered industry 
members already engage in their normal course of business.
    Because the procedures for distributing and selling biodiesel fuels 
are no different from those for other automotive fuels, the Commission 
expects that, consistent with practices in the fuel industry generally, 
the covered parties in the biodiesel fuel industry will record the fuel 
rating certification on documents (e.g., shipping receipts) already in 
use, or will

[[Page 12920]]

use a one-time letter of certification. Furthermore, the Commission 
expects that labeling of biodiesel fuel pumps will be consistent with 
practices in the fuel industry generally. The information collection 
burden, therefore, will be the same as that for other automotive fuels: 
five minutes per year for recordkeeping and 1/8th hour per year for 
disclosure.
    Based on statistics provided by the National Biodiesel Board 
(``NBB''), the Commission estimates that there are approximately 200 
producers of biodiesel, 2000 distributors of biodiesel, and 1500 
retailers of biodiesel.\19\ Conservatively assuming that each producer, 
distributor, and retailer of biodiesel is a distinct entity, and that 
each seller of biodiesel will spend five minutes per year complying 
with the proposed recordkeeping requirements and assuming that each 
retailer will spend 1/8th of an hour per year complying with the 
proposed disclosure requirements, the Commission estimates the 
incremental annual burden to be 309 hours for recordkeeping (1/12th of 
an hour per year times 3700 entities) and 188 hours (1/8th of an hour 
per year times 1,500 retailers). To ensure the accuracy of this burden 
estimate, however, the Commission seeks comment on the paperwork burden 
that the proposed requirements may impose to ensure that the Commission 
has not overlooked any additional burden.
---------------------------------------------------------------------------

    \19\ Because the biodiesel industry is young, estimates of its 
size may not be as accurate as estimates of the size of more mature 
industries. Therefore, we have conservatively rounded up from the 
actual statistics provided by the NBB. In a document dated January 
25, 2008, the NBB estimated a total of 171 producers of biodiesel 
and biodiesel blends. See http://biodiesel.org/pdf_files/fuelfactsheets/Production_Capacity.pdf. In addition, the NBB's 
website lists all known distributors (http://www.biodiesel.org/buyingbiodiesel/distributors/showall.asp) and retailers (http://www.biodiesel.org/buyingbiodiesel/retailfuelingsites/showall.asp) of 
biodiesel. As of February 4, 2008, the site listed approximately 
1250 retailers and 1775 distributors of biodiesel and biodiesel 
blends.
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. Sec. Sec.  601-
612, requires an agency to provide an Initial Regulatory Flexibility 
Analysis (``IRFA'') with a proposed rule and a Final Regulatory 
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. See 5 U.S.C. 
Sec. Sec.  603-605.
    The FTC does not expect that the proposed amendments will have a 
significant economic impact on a substantial number of small entities. 
As explained in Section VI above, each entity in the biodiesel industry 
will spend, at most, five minutes per year complying with the proposed 
recordkeeping requirements and 1/8th of an hour per year complying with 
the disclosure requirements. Staff estimates the mean hourly wage for 
employees of producers, importers, and distributors of biodiesel fuels 
to be $21.39,\20\ and the mean hourly wage for employees of biodiesel 
retailers to be $14.35.\21\ Conservatively assuming that all biodiesel 
producers, distributors, and retailers are small entities, compliance 
with the recordkeeping requirements will cost producers and 
distributors $1.61 per year ($19.34 times 1/12th of an hour) and 
retailers $1.20 ($14.35 times 1/12th of an hour). In addition, under 
the same conservative assumptions, compliance with the proposed 
disclosure requirements will cost retailers $1.79 ($14.35 times 1/8th 
of an hour).
---------------------------------------------------------------------------

    \20\ Bureau of Labor Statistics, 2006 Employment Statistics 
Survey, Annual Average Hourly Earnings for Oil and Gas Extraction 
Production workers.
    \21\ Bureau of Labor Statistics, May 2006 Occupational 
Employment Statistics Survey, ``Correspondence Clerks,'' Table 1.
---------------------------------------------------------------------------

    In addition, retailers will incur the cost of procuring and 
replacing fuel dispenser labels to comply with the disclosure 
requirements of the Rule. Staff has previously estimated that the price 
per automotive fuel label is about fifty cents and that the average 
automotive fuel retailer has 6 dispensers. Applying those estimates to 
the biodiesel fuel industry results in an initial cost to retailers of 
$3.00 (6 pumps times $0.50). In addition, staff has previously 
estimated the useful life of dispenser labels to range from 6 to 10 
years. Assuming a useful life of 8 years, the mean of that range, and 
distributing the costs on a per-year basis, staff estimates the total 
annual replacement labeling cost to be $0.06 (1/8 x $0.50).
    This document serves as notice to the Small Business Administration 
of the agency's certification of no effect. Nonetheless, the Commission 
has determined that it is appropriate to publish an IRFA in order to 
inquire into the impact of the proposed amendments on small entities. 
Therefore, the Commission has prepared the following analysis.

A. Description of the reasons that action by the agency is being 
considered.

    Section 205 of EISA (Pub. L. 110-140) requires the Commission to 
promulgate biodiesel labeling requirements.

B. Statement of the objectives of, and legal basis for, the proposed 
rule.

    The Commission is proposing these amendments to implement 
Congressionally mandated labeling for biodiesel fuels.

C. Description of and, where feasible, estimate of the number of small 
entities to which the proposed rule will apply.

    We assume that all affected entities (200 producers of biodiesel, 
2000 distributors of biodiesel, and 1200 retailers of biodiesel) are 
small businesses. The Commission invites comment and information on 
this issue.

D. Projected reporting, recordkeeping, and other compliance 
requirements.

    The proposed amendments make clear that the recordkeeping and 
certification requirements of the Fuel Rating Rule apply to biodiesel. 
Small entities potentially affected are producers, distributors, and 
retailers of biodiesel fuels. The Commission expects that the 
recordkeeping and certification tasks are done by industry members in 
the normal course of their business. Accordingly, we do not expect the 
proposed amendments to require any professional skills beyond those 
already employed by industry members.

E. Other duplicative, overlapping, or conflicting federal rules.

    The FTC has identified no other federal statutes, rules, or 
policies that conflict with the proposed amendments.

F. Alternatives Considered.

    The requirements proposed by the amendments are minimal and, as 
noted above, do not require creating any separate documents because 
covered parties may use documents already in use to certify a biodiesel 
fuel's rating. The Commission believes that the proposed amendments 
minimize what, if any, economic impact there is from the labeling 
requirements mandated by Sec. 205 of EISA.

VIII. Communications by Outside Parties to Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding from any 
outside party to any Commissioner or Commissioner's advisor will be 
placed on the public record. See 16 CFR 1.26(b)(4).

IX. Proposed Rule Language

List of Subjects in 16 CFR Part 306

    Energy conservation, Gasoline, Incorporation by reference, 
Labeling,

[[Page 12921]]

Reporting and recordkeeping requirements.
    For the reasons set out above, the Commission proposes the 
following amendments to 16 CFR Part 306:

PART 306--AUTOMOTIVE FUEL RATINGS, CERTIFICATION AND POSTING

    1. The authority citation for part 306 continues to read as 
follows:

    Authority: 15 U.S.C. 2801 et seq; Pub. L. 110-140.

    2. Section 306.0(i)(2) is revised to read as follows:


306.0  Definitions.

* * * * *
    (i) * * *
    (2) Alternative liquid automotive fuels, including, but not limited 
to:
    (i) Methanol, denatured ethanol, and other alcohols;
    (ii) Mixtures containing 85 percent or more by volume of methanol, 
denatured ethanol, and/or other alcohols (or such other percentage, but 
notless than 70 percent, as determined by the Secretary of the United 
States Department of Energy, by rule, to provide for requirements 
relating to cold start, safety, or vehicle functions), with gasoline or 
other fuels;
    (iii) Liquefied natural gas;
    (iv) Liquefied petroleum gas;
    (v) Coal-derived liquid fuels;
    (vi) Biodiesel;
    (vii) Biomass-based diesel;
    (viii) Biomass-based diesel blends containing more than 5 percent 
biomass-based diesel by volume; and
    (ix) Biodiesel blends containing more than 5 percent biodiesel by 
volume.
* * * * *
    3. Section 306.0(i)(3) is added to read as follows:


Sec.  306.0  Definitions.

* * * * *
    (i) * * *
    (3) Biodiesel blends that contain less than or equal to 5 percent 
biomass-based diesel or biodiesel by volume, and that meet American 
Society for Testing and Materials (ASTM) standard D975 (``Standard 
Specification for Diesel Fuel Oils''), are not automotive fuels covered 
by the requirements of this Part. The incorporation of ASTM D975 by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of ASTM D975 
may be obtained from American Society of Testing and Materials, 1916 
Race Street, Philadelphia, PA, 19103, or may be inspected at the 
Federal Trade Commission, Public Reference Room, Room 130, 600 
Pennsylvania Avenue, N.W., Washington, D.C., or at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030, or go to: 
http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr_locations.html.
* * * * *
    4. Section 306.0(j)(3) is added to read as follows:


306.0  Definitions.

* * * * *
    (j) * * *
    (3) For biomass-based diesel, biodiesel, and blends thereof, a 
disclosure of the biomass-based diesel or biodiesel component, 
expressed as the percentage by volume.
    5. Section 306.0 is amended by adding paragraphs (k), (l), and (m) 
to read as follows:


306.0  Definitions.

* * * * *
    (k) Biomass-based diesel means a diesel fuel substitute produced 
from nonpetroleum renewable resources that meets the registration 
requirements for fuels and fuel additives established by the 
Environmental Protection Agency under 42 U.S.C. Sec.  7545, and 
includes fuel derived from animal wastes, including poultry fats and 
poultry wastes, and other waste materials, or from municipal solid 
waste and sludges and oils derived from wastewater and the treatment of 
wastewater.
    (l) Biodiesel means the monoalkyl esters of long chain fatty acids 
derived from plant or animal matter that meet:
    (1) The registration requirements for fuels and fuel additives 
under 40 CFR Part 79; and
    (2) The requirements of the ASTM standard D6751 (``Standard 
Specification for Biodiesel Fuel Blend Stock (B100) for Middle 
Distillate Fuels''). The incorporation of ASTM D6751 by reference was 
approved by the Director of the Federal Register in accordance with 5 
U.S.C. 552(a) and 1 CFR Part 51. Copies of ASTM D6751 may be obtained 
from American Society for Testing and Materials, 1916 Race Street, 
Philadelphia, PA, 19103, or may be inspected at the Federal Trade 
Commission, Public Reference Room, Room 130, 600 Pennsylvania Avenue, 
N.W., Washington, D.C., or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal_register/code_of_federal_ regulations/ibr_locations.html.
    (m) Biodiesel blend means a blend of biomass-based diesel or 
biodiesel fuel that is blended with petroleum-based diesel fuel.
    6. Section 306.5(b) is revised to read as follows:


306.5  Automotive fuel rating.

* * * * *
    (b) To determine automotive fuel ratings for alternative liquid 
automotive fuels, you must possess a reasonable basis, consisting of 
competent and reliable evidence, for the percentage by volume of the 
principal component of the alternative liquid automotive fuel that you 
must disclose, or, in the case of biodiesel blends, the percentage of 
biodiesel or biomass-based diesel contained in the fuel. You also must 
have a reasonable basis, consisting of competent and reliable evidence, 
for the minimum percentages by volume of other components that you 
choose to disclose.
    7. Section 306.6(b) is revised to read as follows:


306.6  Certification.

* * * * *
    (b) Give the person a letter or other written statement. This 
letter must include the date, your name, the other person's name, and 
the automotive fuel rating of any automotive fuel you will transfer to 
that person from the date of the letter onwards. Octane rating numbers 
may be rounded to a whole or half number equal to or less than the 
number determined by you. This letter of certification will be good 
until you transfer automotive fuel with a lower automotive fuel rating, 
except that a letter certifying the fuel rating of biomass-based 
diesel, biodiesel, and biodiesel blends will be good only until you 
transfer those fuels with a different automotive fuel rating, whether 
the rating is higher or lower. When this happens, you must certify the 
automotive fuel rating of the new automotive fuel either with a 
delivery ticket or by sending a new letter of certification.
* * * * *
    8. Section 306.10(f) is revised to read as follows:


306.10  Automotive fuel rating posting.

* * * * *
    (f) The following examples of automotive fuel rating disclosures 
for some presently available alternative liquid automotive fuels are 
meant to serve as illustrations of compliance with this part, but do 
not limit the Rule's coverage to only the mentioned fuels:
    (1) ``Methanol/Minimum ------% Methanol''

[[Page 12922]]

    (2) ``Ethanol/Minimum ------% Ethanol''
    (3) ``M--85/Minimum ------% Methanol''
    (4) ``E--85/Minimum ------% Ethanol''
    (5) ``LPG/Minimum ------% Propane'' or
    ``LPG/Minimum ------% Propane and ------% Butane''
    (6) ``LNG/Minimum ------% Methane''
    (7) ``B-20 Biodiesel Blend/contains biomass-based diesel or 
biodiesel in quantities between 5 percent and 20 percent''
    (8) ``B-100 Biodiesel/contains 100 percent biomass-based diesel or 
biodiesel''
* * * * *
    9. In Sec.  306.12, paragraph (a)(2) is revised to read as follows:


306.12  Labels.

* * * * *
    (a) * * *
    (2) For alternative liquid automotive fuel labels (one principal 
component) other than biodiesel blends. The label is 3 inch (7.62 cm) 
wide 2 1/2 inch (6.35 cm) long. ``Helvetica black'' type is used 
throughout. All type is centered. The band at the top of the label 
contains the name of the fuel. This band should measure 1 inch (2.54 
cm) deep. Spacing of the fuel name is 1/4 inch (.64 cm) from the top of 
the label and 3/16 inch (.48 cm) from the bottom of the black band, 
centered horizontally within the black band. The first line of type 
beneath the black band is 1/8 inch (.32 cm) from the bottom of the 
black band. All type below the black band is centered horizontally, 
with1/8 inch (.32 cm) between each line. The bottom line of type is 3/
16 inch (.48 cm) from the bottom of the label. All type should fall no 
closer than 3/16 inch (.48 cm) from the side edges of the label. If you 
wish to change the dimensions of this single component label to 
accommodate a fuel descriptor that is longer than shown in the sample 
labels, you must petition the Federal Trade Commission. You can do this 
by writing to the Secretary of the Federal Trade Commission, 
Washington, DC 20580. You must state the size and contents of the label 
that you wish to use, and the reasons that you want to use it.
* * * * *
    10. In Sec.  306.12, paragraphs (a)(4), (a)(5), and (a)(6) are 
added to read as follows:


306.12  Labels.

* * * * *
    (a) * * *
    (4) For biodiesel blends containing more than 5 percent and no 
greater than 20 percent biomass-based diesel or biodiesel by volume. 
The label is 3 inch (7.62 cm) wide 2 1/2 inch (6.35 cm) long. 
``Helvetica black'' type is used throughout. All type is centered. The 
band at the top of the label contains either:
    (i) The capital letter ``B'' followed immediately by the numerical 
value representing the volume percentage of biodiesel or biomass-based 
diesel in the fuel (e.g., ``B-20'') and then by the term ``Biodiesel 
Blend''; or
    (ii) The term ``Biodiesel Blend.''
    The band should measure 1 inch (2.54 cm) deep. Spacing of the text 
in the band is 1/4 inch (.64 cm) from the top of the label and 3/16 
inch (.48 cm) from the bottom of the black band, centered horizontally 
within the black band. Directly underneath the black band, the label 
shall read ``contains biomass-based diesel or biodiesel in quantities 
between 5 percent and 20 percent.'' The script underneath the black 
band must be centered horizontally, with 1/8 inch (.32 cm) between each 
line. The bottom line of type is 1/4 inch (.64 cm) from the bottom of 
the label. All type should fall no closer than 3/16 inch (.48 cm) from 
the side edges of the label.
    (5) For biodiesel blends containing more than 20 percent biomass-
based diesel or biodiesel by volume. The requirements are the same as 
in Section 306.12(a)(4), except that the black band at the top of the 
label shall contain the capital letter ``B'' followed immediately by 
the numerical value representing the volume percentage of biodiesel or 
biomass-based diesel in the fuel (e.g., ``B-70'') and then the term 
``Biodiesel Blend.'' In addition, the words directly underneath the 
black band shall read ``contains more than 20 percent biomass-based 
diesel or biodiesel.''
    (6) For biodiesel (B-100). The requirements are the same as in 
Sec.  306.12(a)(4), except that the black band at the top of the label 
shall contain the phrase ``B-100 Biodiesel.'' In addition, the words 
directly underneath the black band shall read ``contains 100 percent 
biomass-based diesel or biodiesel.''
* * * * *
    11. In Sec.  306.12, paragraph (c)(2) is revised and paragraph 
(c)(3) is added to read as follows:


306.12  Labels.

* * * * *
    (c) * * * *
    (2) For alternative liquid automotive fuel labels other than 
biodiesel, biomass-based diesel, and biodiesel blends. The background 
color on all the labels is Orange: PMS 1495 or its equivalent. The 
knock-out type within the black band is Orange: PMS 1495 or its 
equivalent. All other type is process black. All borders are process 
black. All colors must be non-fade.
    (3) For biodiesel, biomass-based diesel, and biodiesel blends. The 
background color on all the labels is Purple: PMS 2562 or its 
equivalent. The knock-out type within the black band is Purple: PMS 
2562 or its equivalent. All other type is process black. All borders 
are process black. All colors must be non-fade.
* * * * *
    12. In Sec.  306.12(f), the following graphics are added to the end 
of the section to read as follows:


306.12  Labels.

* * * * *
    (f) * * *

[[Page 12923]]

[GRAPHIC] [TIFF OMITTED] TP11MR08.000

    By direction of the Commission.

Donald S. Clark,
Secretary
[FR Doc. E8-4699 Filed 3-10-08: 8:45 am]
BILLING CODE 6751-01-S