[Federal Register Volume 78, Number 97 (Monday, May 20, 2013)]
[Proposed Rules]
[Pages 29263-29279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-10584]


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FEDERAL TRADE COMMISSION

16 CFR Part 303


Rules andRegulations Under the Textile Fiber Products 
Identification Act

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: Based on comments received in response to its Advance Notice 
of Proposed Rulemaking (``ANPR''), the Commission proposes amending the 
rules and regulations under the Textile Fiber Products Identification 
Act (``Textile Rules'' or ``Rules'') to: Incorporate the updated ISO 
standard 2076:2010(E); allow certain hang-tags that do not disclose the 
product's full fiber content information; better address electronic 
commerce by amending the definition of the terms invoice and invoice or 
other paper; update the guaranty provisions by, among other things, 
replacing the requirement that suppliers provide a guaranty signed 
under penalty of perjury with a certification that must be renewed 
annually, and revising accordingly the form used to file continuing 
guaranties with the Commission under the Textile, Fur, and Wool Acts; 
and clarify several other provisions. The Commission seeks comment on 
these proposals and several remaining issues.

DATES: Written comments must be received on or before July 8, 2013.

[[Page 29264]]


ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Textile Rules, 16 CFR 
Part 303, Project No. P948404'' on your comment, and file your comment 
online at https://ftcpublic.commentworks.com/ftc/textilerulesnprm by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, mail or deliver your comment to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-113 
(Annex G), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Robert M. Frisby, Attorney, (202) 326-
2098, and Amanda Kostner, Attorney, (202) 326-2880, Federal Trade 
Commission, Division of Enforcement, Bureau of Consumer Protection, 600 
Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Textile Fiber Products Identification Act (``Textile Act'') \1\ 
and Rules require marketers to, among other things, attach a label to 
each covered textile product disclosing: (1) The generic names and 
percentages by weight of the constituent fibers in the product; (2) the 
name under which the manufacturer or other responsible company does 
business or, in lieu thereof, the company's registered identification 
number (``RN number''); and (3) the name of the country where the 
product was processed or manufactured.\2\ As part of its ongoing 
regulatory review program, the Commission published an ANPR in November 
2011 seeking comment on the economic impact of, and the continuing need 
for, the Textile Rules; the benefits of the Rules to consumers; and the 
burdens the Rules place on businesses.\3\ The ANPR also sought comment 
on specific issues, including whether the Commission should amend the 
Rules to incorporate the revised version of International Organization 
for Standardization (``ISO'') standard entitled ``Textiles--Man-made 
fibres--Generic names,'' 2076:1999(E), clarify disclosure requirements 
for products containing elastic material and trimmings, clarify 
disclosure requirements for written advertising, and modify the Rules' 
guaranty provisions.
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    \1\ 15 U.S.C. 70 et seq.
    \2\ See 15 U.S.C. 70b(b).
    \3\ Federal Trade Commission: Rules and Regulations Under the 
Textile Fiber Products Identification Act, 76 FR 68690 (Nov. 7, 
2011).
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    This Notice of Proposed Rulemaking (``NPRM'') summarizes the 
comments received, explains the Commission's decision to retain the 
Rules, proposes several amendments, and explains why the Commission has 
declined to propose certain amendments. It also solicits additional 
comment, and provides analyses under the Regulatory Flexibility Act and 
the Paperwork Reduction Act. Finally, the NPRM sets forth the 
Commission's proposed amendments to the Rules.

II. Summary of Comments

    The Commission received 17 comments \4\ in response to the ANPR 
from individuals,\5\ a fabric manufacturer,\6\ trade associations 
representing industries affected by the Textile Rules,\7\ textile 
compliance and testing entities,\8\ and a retailer.\9\ The comments 
indicated widespread support for the Textile Rules. For example, the 
joint comment of eight textile trade associations (``joint comment'') 
stated that the use of labels on textiles and apparel benefits 
consumers and businesses.\10\ The comments, however, recommended that 
the Commission modify or clarify requirements pertaining to fiber 
content disclosures, country of origin, and the identification of 
manufacturers in various ways.
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    \4\ The comments are posted at http://www.ftc.gov/os/comments/textilerulesanpr/index.shtm. The Commission has assigned each 
comment a number appearing after the name of the commenter and the 
date of submission. This notice cites comments using the last name 
of the individual submitter or the name of the organization, 
followed by the number assigned by the Commission.
    \5\ Lunde (10), Nitaki (7), and Robledo (11).
    \6\ Classical Silk, Inc. (13).
    \7\ Joint comment (18) of the American Apparel and Footwear 
Association (``AAFA''), the American Fiber Manufacturers 
Association, Inc. (``AFMA''), American Manufacturing Trade Action 
Coalition (``AMTAC''), the Canadian Apparel Federation (``CAF''), 
the National Council of Textile Organizations (``NCTO''), the 
National Retail Federation (``NRF''), the National Textile 
Association (``NTA''), and the U.S. Association of Importers of 
Textiles and Apparel (``USA-ITA''). Five of these industry 
associations also filed individual comments: AAFA (17), CAF (19), 
NRF (20), NTA (15), and USA-ITA (14).
    \8\ Bureau Veritas (9), Compliance & Risks, Ltd. (``C&R'') (6), 
Consumer Testing Laboratories (12), McNeese Customs & Commerce 
(``McNeese'') (4), and Vartest Laboratories, Inc. (``Vartest'') (3).
    \9\ IKEA North America Services, LLC (``IKEA'') (5).
    \10\ Joint comment (18). Two comments from individuals, Nitaki 
(7) and Robledo (11), expressed concern about the costs of textile 
regulations, especially on small businesses.
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    In connection with fiber content disclosures, the joint comment and 
six others supported amending section 303.7 to incorporate the revised 
ISO standard for man-made fiber names, ISO 2076:2010(E).\11\ Six also 
requested that the Commission clarify provisions relating to fiber 
content disclosures for trimmings and ornamentation.\12\ In addition, 
the joint comment and three others requested that the Commission modify 
fiber content disclosure requirements when fiber trademarks or fiber 
performance characteristics appear on hang-tags and other point-of-sale 
materials.\13\
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    \11\ Joint comment (18), AAFA (17), CAF (19), NRF (20), NTA 
(15), USA-ITA (14), and C&R (6).
    \12\ Bureau Veritas (9), Consumer Testing Laboratories (12), 
USA-ITA (14), AAFA (17), CAF (19), and NRF (20).
    \13\ Joint comment (18), AAFA (17), NTA (15), and USA-ITA (14).
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    In connection with country-of-origin disclosures, one comment 
requested that the Commission explain the interplay between the Textile 
Rules and U.S. Customs country-of-origin regulations to clarify that 
the country-of-origin disclosure pursuant to the Rules is consistent 
with the Customs regulations.\14\ In connection with the identification 
of manufacturers, four urged the Commission to recognize Canadian 
registered identification numbers (``CAs'') as alternative 
identification.\15\
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    \14\ USA-ITA (14).
    \15\ AAFA (17), CAF (19), NRF (20), and USA-ITA (14).
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    The comments also made more general recommendations that did not 
focus on specific required disclosures. For example, the comments urged 
the Commission to make the Rules more pertinent to the current textile 
industry. One such comment asked the Commission to amend the Rules to 
add and revise defined terms relating to the electronic fulfillment 
processes widespread in the textile industry (i.e., by including a 
definition of electronic agent and modifying the definition of invoice 
or other paper in the Rules).\16\ This comment also urged the 
Commission to make various changes to the Textile Rules' guaranty 
provisions, in part to address the fact that most textiles are now 
imported.
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    \16\ NRF (20).
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    Other comments suggested amendments of a technical nature (e.g., 
simplifying potentially confusing phrasing in various provisions of the 
Rules). For example, six expressed strong support for multiple-language 
disclosures on textile labels to foster international trade.\17\ One 
urged the Commission to define acceptable formats for making such 
disclosures.\18\ Other comments advocated

[[Page 29265]]

modifications to FTC consumer and business education materials related 
to textiles, including the addition of examples of compliant 
disclosures (e.g., disclosures relating to decoration or 
ornamentation).\19\
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    \17\ AAFA (17), Bureau Veritas (9), CAF (19), C&R (6), McNeese 
(4), and USA-ITA (14).
    \18\ Bureau Veritas (9).
    \19\ E.g., C&R (6) and AAFA (17).
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III. Retention of the Rules

    As part of the Commission's systematic regulatory review, the ANPR 
asked whether there is a continuing need for the Rules as currently 
promulgated and requested comment about the Rules' benefits and costs. 
The record shows wide support for the Textile Rules from the textile 
industry. Among other things, comments supporting the Rules explained 
that they benefit both businesses and consumers, help consumers make 
informed purchasing decisions, and prevent deceptive marketing.\20\ 
Moreover, a rule is necessary to implement the Textile Act and thus the 
Commission lacks the discretion to rescind the Rules.
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    \20\ Joint comment (18), AAFA (17), CAF (19), and NTA (15).
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    Two comments from individuals that expressed concern about 
overregulation of textile products failed to provide any tangible 
evidence to support their assertions.\21\ There is no evidence in the 
record showing that the Rules impose excessive costs on industry, 
including small businesses, or that the disclosures required by the 
Rules are not important or material to consumers.
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    \21\ Nitaki (7) and Robledo (11).
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IV. Proposed Amendments

    Based on the record and the Commission's experience, the Commission 
proposes several amendments as explained below.\22\ The Commission also 
explains why it declines to propose several other amendments.
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    \22\ Two comments recommended amendments to the Textile Act. 
Bureau Veritas recommended revising the Textile Act to allow for the 
naming of fibers present in amounts less than 5% regardless of 
whether the fibers have a structural significance. Adam Varley 
recommended adding yak fibers to the definition of wool under the 
Act, which also would require an amendment to the Wool Act because 
the definition of wool comes from the Wool Act. Neither commenter 
provided evidence that the benefits of the proposed amendments, 
which would require new legislation, would exceed their costs.
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A. Fiber Content Disclosures

    The Commission proposes the following amendments to the Rules' 
fiber content disclosures: (1) Revising section 303.7 to incorporate 
the updated ISO standard establishing generic fiber names for 
manufactured fibers; (2) clarifying section 303.12(a) concerning 
disclosures involving trimmings; (3) revising section 303.17(b) to 
allow certain hang-tags disclosing fiber names and trademarks, and 
performance information, without disclosing the product's full fiber 
content; and (4) clarifying section 303.35, describing products 
containing virgin or new wool, and sections 303.41 and 303.42, 
addressing fiber content disclosures in advertising. This section also 
explains why the Commission declines to propose certain amendments 
relating to fiber content advocated by comments.
1. International Standards and Regulations
    The Commission proposes to amend the Rules to incorporate the 
revised ISO standard for man-made fiber names. The Commission, however, 
declines to propose any amendments to further align the Rules with 
textile regulations in other countries.
(a) The Updated ISO Standard for Man-Made Fiber Names
    Section 303.7 (generic names and definitions for manufactured 
fibers) establishes the generic names for manufactured fibers to be 
used in the fiber content disclosures required by the Textile Act and 
Rules. This section establishes such names in two ways. First, it 
includes the generic names and definitions that the Commission has 
established through its textile petition process. Second, it 
establishes through incorporation by reference the generic names and 
definitions set forth in the ISO standard entitled ``Textiles--Man-made 
fibres--Generic names,'' 2076:1999(E). Since the Commission 
incorporated ISO 2076:1999(E) into section 303.7 in 2000, the ISO 
standard has been updated, and is now identified as ISO 2076: 
2010(E).\23\
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    \23\ The revised standard differs from the previous version in 
various ways; for example, it establishes rayon as an alternate name 
for the existing name viscose; establishes spandex as an alternate 
name for the existing name elastane; changes the name metal fibre to 
metal; and establishes the following new generic names: 
elastomultiester or elasterell-p; polylactide or PLA; and 
elastolefin or lastol.
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    The comments expressed strong support for modifying section 303.7 
to incorporate the revised international standard for man-made fiber 
names.\24\ The joint comment noted that the ISO standard benefits 
businesses by establishing an international consensus that removes 
unnecessary barriers to trade. USA-ITA stated that the ISO standard 
helps its members develop labeling that satisfies the requirements of 
multiple countries. AAFA noted that the ISO standard would reduce 
Customs challenges. NRF stated that the Commission's adoption of the 
ISO standard would help forestall nationally-biased standards that 
often create barriers to trade and hinder efficient supply-chain 
management. C&R supported the modification as a way of addressing 
frequent inquiries from retailers, manufacturers, and brand companies 
relating to the standard.
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    \24\ Joint comment (18), AAFA (17), CAF (19), NRF (20), NTA 
(15), USA-ITA (14), and C&R (6).
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    Easing barriers to trade was one of the reasons for incorporating 
the previous version of the international standard into section 303.7 
and remains an important priority for the Commission. Incorporating the 
updated standard would further this goal by permitting more 
internationally-recognized fiber names. In addition, updating the Rules 
would promote efficiency by reducing the need for industry members to 
petition the Commission to recognize new fiber names on a piecemeal 
basis. Accordingly, the Commission proposes to amend section 303.7 to 
incorporate the revised ISO standard ISO 2076:2010(E), ``Textiles--Man-
made fibres--Generic names.''
    The Commission notes that section 303.7 and the revised ISO 
standard define certain fiber names slightly differently. For example, 
section 303.7 includes elasterell-p as a subclass of polyester,\25\ 
while the ISO standard includes elasterell-p as an alternate name for 
elastomultiester.\26\ Similarly, section 303.7 includes lastol as a 
subclass of olefin,\27\ while the ISO standard includes lastol as an 
alternate name for elastolefin.\28\ The comments do not suggest that 
these differences present an obstacle to incorporating the ISO standard 
into section 303.7 or warrant any other amendments to that section. 
However, the Commission seeks comment on whether these differences 
present any problems and, if so, how the Commission should address 
them.
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    \25\ 16 CFR 303.7(c)(1).
    \26\ ISO 2076:2010(E) defines elastomultiester or elasterell-p 
as follows: Fibre formed by the interaction of two or more 
chemically distinct linear macromolecules in two or more phases (of 
which none exceeds 85% by mass), which contains ester groups (at 
least 85%) as the dominant function and suitable treatment, and 
which, when stretched by 50% and released, durably and rapidly 
reverts substantially to its unstretched length.
    \27\ 16 CFR 303.7(m).
    \28\ ISO 2076:2010(E) defines elastolefin or lastol as follows: 
Fibre composed of at least 95% by mass of partially cross-linked 
macromolecules, made up from ethylene and at least one other olefin, 
which, when stretched to one and a half times its original length 
and released, reverts rapidly and substantially to its initial 
length.
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    USA-ITA recommended that the Commission further amend section 303.7 
to automatically incorporate future changes to the ISO standard to 
eliminate the need to amend section 303.7 each time the standard 
changes.

[[Page 29266]]

However, the Textile Act directs the Commission to establish the 
generic names of manufactured fibers.\29\ Pursuant to this 
responsibility, the Commission cannot preapprove generic names that may 
be added to the ISO standard in the future. Nor can the Commission 
delegate its responsibility to establish fiber names to a standard 
setting organization such as the ISO.\30\ The Commission therefore 
declines to propose this amendment.
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    \29\ 15 U.S.C. 70e(c).
    \30\ Moreover, the Federal Register mandates that all materials 
to be incorporated by reference in regulatory text must be 
specifically identified by title, date, edition, author, publisher, 
and identification number of the publication. Automatic 
incorporation into the Textile Rules of future changes to an ISO or 
any other industry standard would be inconsistent with this 
requirement. See generally, National Archives and Records 
Administration, Office of the Federal Register, ``Federal Register 
Document Drafting Handbook,'' ch. 6 at p. 5 (Jan. 2011 revision) 
available at http://www.archives.gov/federal-register/write/handbook/chapter-6.pdf.
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(b) International Regulations
    To further ease trade barriers, the comments supported harmonizing 
the Textile Rules with regulations of other countries. USA-ITA stated 
that differing national labeling requirements inhibit U.S. companies 
from selling textile products in international markets, and suggested 
that the Commission consider recognizing international labeling 
requirements. CAF stated that the review of the Textile Rules is an 
excellent opportunity for the U.S. and Canada to harmonize labeling 
requirements. In addition, IKEA recommended that the FTC consider 
European Union Regulation (EU) No 1007/2011, and ``align the US rules 
to the new EU regulation as much as possible, especially in regards to 
accepted fiber names and tolerances for fiber content.'' The comments 
promoting harmonization were very general and either did not discuss 
how the Commission should change the Textile Rules to further reduce 
barriers to trade, or did not discuss how specific international 
labeling requirements relate to the requirements of the Textile Rules 
or whether they are consistent with the Textile Act.
    The Commission declines to propose aligning the Textile Rules more 
closely with EU regulations. The Rules and EU regulations already 
substantially overlap. Specifically, all but five of the generic fiber 
names for man-made fibers in the EU regulations also appear in the 
proposed Rules.\31\ With respect to fiber tolerances (i.e., permissible 
deviations from specified fiber percentages), the Rules already allow 
the same tolerance as the EU regulations for textile products 
containing multiple fibers.\32\
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    \31\ The EU regulations recognize the following generic fiber 
names which do not appear in either section 303.7 or the ISO 
standard: protein, polycarbamide, polyurethane, trivinyl, and 
polypropylene/polyamide bicomponent. However, ISO 2076:2010(E) 
includes polypropylene and polyamide as separate generic fiber 
names.
    \32\ The Commission lacks the authority to reconcile the Rules 
with the EU regulations on tolerances for products containing a 
single fiber. The Textile Act authorizes the Commission to set 
tolerances only for products that contain multiple fibers. 15 U.S.C. 
70b(b)(2). Section 303.43 of the Rules (Fiber content tolerances) 
implements this statutory provision, and provides that products 
containing more than one fiber are not misbranded if the fiber 
content does not deviate from the stated percentages by more than 3% 
of the total fiber weight.
    EU regulations allow the same tolerance for multi-fiber textile 
products. See EU regulation No. 1007/2011, Article 20 (Tolerances), 
paragraph 3. Unlike the Rules, the EU regulations also allow a 
tolerance of 2-5% even when products have labels indicating that 
they consist of a single fiber. See EU regulation No. 1007/2011, 
Article 7 (Pure textile products), paragraph 2.
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    Additionally, the record does not support further harmonization. 
For example, it does not address whether differences between the Rules 
and EU regulations create problems for industry, or whether the 
benefits of further harmonization exceed the costs. Moreover, unlike 
the unanimous support for incorporating the latest ISO standard, which 
reflects a long-standing international consensus, further harmonization 
with the EU regulation was supported by only one commenter. Two 
comments urged greater international harmonization. One urged greater 
harmonization generally. The other sought increased consistency between 
Canadian and United States labeling. Neither, however, proposed 
specific changes or provided evidence regarding the problems caused by 
the lack of harmonization. Moreover, neither indicated whether the 
benefits of further harmonization would exceed the costs.
2. Trimmings and Ornamentation
    The Textile Act and Rules exempt trimmings and ornamentation from 
the fiber content disclosure requirement under certain 
circumstances,\33\ and require that the fiber content disclosure state 
that it does not apply to trimmings or ornamentation.\34\ Six comments 
stated that the Rules relating to trimmings and ornamentation overlap 
and create confusion.\35\ These comments proposed four amendments and a 
clarification. The Commission addresses each below.
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    \33\ Section 303.12 exempts trimmings that consist of decoration 
or elastic findings if they do not exceed 15 or 20 percent, 
respectively, of the product's surface area. Section 303.26 exempts 
ornamentation from the fiber content disclosure requirement if it 
does not exceed 5% of the total fiber weight of the product. As long 
as no representation is made about the fiber content of the 
trimmings or ornamentation, a fiber content disclosure is not 
required under these circumstances.
    \34\ Specifically, section 303.12 requires that the fiber 
content disclosure for a product containing exempted trimmings 
include a statement that the disclosure is ``exclusive of 
decoration'' or ``exclusive of elastic.'' Similarly, section 303.26 
requires that the fiber content disclosure for a product containing 
exempted ornamentation include a statement that the disclosure is 
``exclusive of ornamentation.''
    \35\ Bureau Veritas (9), Consumer Testing Laboratories (12), 
USA-ITA (14), AAFA (17), CAF (19), and NRF (20).
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    First, Consumer Testing Laboratories recommended that the 
Commission define ``minor proportion'' in the description of trimmings 
\36\ because ``the challenge for the industry is in determining what is 
considered minor proportion.'' However, the comment did not propose any 
particular definition, and it is the experience of the Commission that 
the absence of a definition of this term has not posed significant 
problems. Furthermore, the limited inquiries received by the Commission 
regarding this phrase indicate that its application to particular 
textile products is fact-specific, and that the phrase allows necessary 
flexibility. In addition, none of the other comments urged the 
Commission to address this issue. Therefore, the Commission declines to 
propose amending this section to define ``minor proportion.'' The 
Commission notes that interested parties may seek advice from 
Commission staff, or consult educational materials published by the 
Commission.
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    \36\ Section 303.12(a) of the Rules provides, in part, that 
trimmings may include elastic materials and threads inserted or 
added to the product in minor proportion for holding, reinforcing or 
similar structural purposes.
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    Second, USA-ITA recommended that the Commission amend section 
303.12 to clarify that elastic material is not a ``finding'' if it 
exceeds 20 percent of the surface area of a household textile article. 
The Commission, however, finds that section 303.12 is sufficiently 
clear. Under section 303.12, trim clearly includes both ``findings'' 
and certain elastic material that does not exceed 20 percent of the 
surface area.\37\ Thus, the Rules are clear that elastic material is 
not a ``finding'' or any other type of trim if it exceeds 20 percent of 
the surface area. In addition, the comments did not present any 
evidence that the provision has resulted in general confusion. The 
Commission therefore declines to propose this amendment.
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    \37\ 16 CFR 303.12(b).
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    Third, USA-ITA advocated amending the Rules to eliminate the fiber 
content

[[Page 29267]]

disclosure for embroidery or other decoration on the interior of 
garments. Section 303.12(a) does not require a fiber content disclosure 
for decorative trim, whether applied by embroidery, overlay, applique, 
or attachment; or decorative patterns or designs which are an integral 
part of the fabric if the decorative trim or decorative pattern or 
design does not exceed 15 percent of the surface area of the article. 
If the embroidery or decoration exceeds this threshold, consumers may 
well regard the fiber content as material regardless of where it 
appears in the product. USA-ITA did not present any evidence showing 
otherwise. The Commission therefore declines to propose this amendment.
    Fourth, NRF stated that when a textile product contains trimmings, 
elastic, and ornamentation, separately disclosing that each of these 
parts are excluded is excessive and does not provide meaningful 
information. NRF therefore recommended that the Commission amend the 
Rules to require only one statement. The Commission declines to propose 
this amendment because the Rules do not mandate the repetition of the 
phrase ``exclusive of'' (e.g., ``exclusive of elastic,'' ``exclusive of 
ornamentation'') as NRF suggests. Rather, the Rules do not prohibit and 
therefore already allow such disclosures to be made in one statement 
(e.g., ``exclusive of elastic and ornamentation'').\38\
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    \38\ Furthermore, when a textile product has a component or 
feature that falls under the description of trimmings under section 
303.12 and the definition of ornamentation under sections 303.1(q) 
and 303.26, nothing in the Rules prohibits making a single 
disclosure ``exclusive of decoration'' or ``exclusive of 
ornamentation.''
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    Fifth, Bureau Veritas stated that where textile decoration is made 
of the same fiber blend as the fabric to which it is attached, although 
in different proportions, requiring the phrase ``exclusive of 
decoration'' may be unwarranted. Bureau Veritas requested that the FTC 
clarify the reason for using ``exclusive of decoration'' in that 
instance. The Commission notes that the disclosure is necessary 
because, if the decoration's fiber content differs in proportions from 
the fabric's fiber content, the fiber content disclosure for the fabric 
would not accurately describe the decoration's or the garment's fiber 
content. However, when the fabric's fiber content is the same as the 
decoration's fiber content, the Commission agrees that the Rules would 
not require the ``exclusive of decoration'' statement. The Commission 
proposes amending section 303.12 to clarify this point.
    Although it declines to propose some of these suggested changes, 
the Commission proposes amending section 303.12 to clarify when the 
Textile Act and Rules exempt trimmings from fiber content disclosures. 
As described above, section 303.12 currently describes trimmings and 
the conditions for exempting trim from disclosure requirements, but 
does not expressly state that trim is generally exempt. The Commission 
proposes amending section 303.12 to remedy this omission.
    Specifically, the Commission proposes amending section 303.12 to 
clarify that: (1) Section 12 of the Textile Act exempts trimmings; (2) 
exempt trimmings do not include decorative trim, decorative patterns 
and designs, and elastic material in findings that exceed the surface 
area thresholds described later in section 303.12; and (3) if the fiber 
content of exempt trimmings consisting of decorative trim or decoration 
differs from the fabric's fiber content, the fiber content of the 
fabric shall be followed by the statement ``exclusive of decoration.''
    Finally, as recommended by AAFA, the Commission staff will continue 
to provide advice and educational materials on how to properly label 
products with decorative trim and ornamentation.
3. Disclosure Requirements Applicable to Hang-Tags and Advertisements
    The Rules allow disclosure of non-deceptive fiber trademarks in 
conjunction with the generic name of each such fiber, and address how 
labels disclose these fiber trademarks. In particular, section 
303.17(b) provides that a label using a generic name or a fiber 
trademark must disclose full and complete fiber content the first time 
the generic name or fiber trademark appears on the label. Similarly, 
sections 303.41 and 303.42 address fiber content disclosures in 
advertising, including point-of-sale advertising. These sections 
require a fiber content disclosure, including the generic name of the 
fiber, in advertising that uses a fiber trademark.
    The joint comment of eight trade associations urged the Commission 
to modify the Rules to allow the use of hang-tags and other point-of-
sale (``POS'') materials relating to fiber trademarks and performance 
without requiring disclosure of full fiber content information.\39\ The 
joint comment did not urge the Commission to amend any particular 
section of the Rules. However, two of the eight trade associations also 
submitted a separate comment urging the Commission to amend section 
303.17 to address this issue.\40\
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    \39\ Joint comment (18).
    \40\ AAFA (17) and USA-ITA (14).
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    The joint comment and AAFA stated that the requirement that a full 
fiber content disclosure be made whenever a fiber trademark is used on 
a label (e.g., on hang-tags) is unnecessary for consumers and a burden 
on fiber producers. AAFA stated that requiring fiber percentages on 
hang-tags is redundant since the information is mandated on the 
required textile label. The joint comment, AAFA, and USA-ITA stated 
that fiber manufacturers often create hang-tags to provide important 
information about the performance characteristics and attributes of 
their fibers (e.g., the fiber's ability to stretch, its recycled 
content, the UV protection it provides, its moisture management 
characteristics, and its antimicrobial properties). However, fiber 
manufacturers may not know the final composition of the fabric or 
garment made with their fibers at the time they create these hang-tags. 
The final composition of the fabric or garment is determined by fabric 
manufacturers and apparel assemblers.
    Therefore, the comments asserted that section 303.17 inhibits them 
from creating hang-tags to provide consumers with important fiber 
performance information. Instead of requiring a full fiber content 
disclosure, the comments recommended that the Textile Rules prohibit 
deceptive representations about fiber content on hang-tags and POS 
materials.\41\
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    \41\ Joint comment (18), AAFA (17), NTA (15), USA-ITA (14), C&R 
(6).
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    The Commission agrees. Section 303.17(b) may well discourage the 
non-deceptive use of fiber trademarks and truthful fiber performance 
representations on hang-tags. Furthermore, the Commission does not see 
any reason to prevent fiber, fabric, or garment manufacturers from 
creating hang-tags to provide consumers with truthful non-deceptive 
information, provided the product has a label with full fiber content 
information as required by the Act and the Rules. Allowing such hang-
tags could also lower compliance costs because the tags would not have 
to include the full fiber content information. The Commission proposes 
to amend section 303.17(b) accordingly.
    The Commission notes, however, that under some circumstances hang-
tags without full fiber content information might mislead consumers if 
consumers mistakenly believe that the hang-tag provides full fiber 
content information.

[[Page 29268]]

For example, a consumer reading a garment hang-tag with the trademark 
for a rayon fiber might incorrectly conclude that the product consists 
entirely of rayon.
    To address this concern, the Commission proposes amending section 
303.17(b) to provide that hang-tags stating a fiber generic name or 
trademark must disclose clearly and conspicuously that the hang-tag 
does not provide the product's full fiber content unless the product's 
full fiber content is disclosed on the hang-tag or if the product is 
entirely composed of that fiber. Proposed section 303.17(b) provides 
two examples of compliant disclosures: ``This tag does not disclose the 
product's full fiber content'' and ``See label for the product's full 
fiber content.''
    The joint comment also proposed that the Commission amend the rules 
to allow POS materials other than hang-tags to disclose fiber 
trademarks and performance without requiring disclosure of full fiber 
content information. However, the Textile Act requires that any written 
advertisement used to promote, sell or offer the product for sale 
disclose the product's full fiber content (although it need not 
disclose fiber percentages).\42\ Therefore, the Commission does not 
propose to amend sections 303.41 or 303.42 to allow POS advertising to 
disclose fiber trademarks and performance without requiring a fiber 
content disclosure.\43\
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    \42\ 15 U.S.C. 70b(c) (``a textile fiber product shall be 
considered to be falsely or deceptively advertised if any disclosure 
or implication of fiber content is made in any written advertisement 
which is used to aid, promote, or assist directly or indirectly in 
the sale or offering for sale of such textile fiber product'' unless 
the fiber content disclosure ``is contained in the heading, body, or 
other part of such written advertisement, except that the 
percentages of the fiber present in the textile fiber product need 
not be stated'').
    \43\ Although hang-tags ordinarily constitute advertising, the 
Textile Act distinguishes between a ``stamp, tag, label, or other 
means of identification'' affixed to the product and a ``written 
advertisement.'' Each product must have a ``stamp, tag, label, or 
other means of identification'' that discloses the full fiber 
content, but in contrast to written advertisements, the Act does not 
require that each such ``tag'' or ``label'' make a full fiber 
content disclosure. See 15 U.S.C. 70b(b) and (c).
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    Apart from the absence of statutory authority, the Commission notes 
that practical considerations warrant different treatment of hang-tags 
and advertisements. Hang-tags are affixed to the product, and likely 
are in relatively close proximity to the required labels disclosing the 
product's full fiber content. Therefore, a consumer examining a textile 
fiber product could read any labels and hang-tags at the same time the 
consumer considers purchasing the product. Because the required label 
disclosing the product's full fiber content is, like the hang-tag, 
affixed to the product, there is no need for, and the Act does not 
require, the hang-tag to disclose the product's full fiber content 
with, or without, the fiber percentages.
    In contrast, advertisements not affixed to the product have no such 
likely proximity to the product. A consumer reviewing such 
advertisements without access to the product would not necessarily be 
able to review any labels disclosing the product's full fiber content 
at the same time the consumer considers the advertisements.
4. Clarifications of Sections Relating to ``Virgin'' or ``New'' Fibers 
and Disclosures in Advertising
    Based on informal inquiries received over the years, the Commission 
proposes clarifying sections 303.35, 303.41, and 303.42. None of the 
proposed clarifications involve a substantive change.
(a) New or Virgin Fiber
    Section 303.35 states that the terms ``virgin'' or ``new'' should 
not be used to describe a product or any fiber or part thereof when the 
product or part so described is not wholly virgin or new. Although this 
section governs descriptions of any ``product, or any fiber or part 
thereof,'' (emphasis added), it only expressly allows the use of the 
terms ``virgin'' or ``new'' in connection with ``the product or part so 
described,'' not the ``fiber.''\44\ In other words, this provision 
literally prohibits truthful fiber content claims for virgin or new 
fiber. Prohibiting such truthful claims does not advance the goals of 
the Textile Act or protect consumers from deception, and prohibiting 
such claims was not the Commission's intent when it promulgated this 
provision.
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    \44\ For example, a product or part containing 50% new fibers 
could not be described as containing 50% ``new'' fibers because the 
product or part is not composed wholly of such fibers.
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    Accordingly, the Commission proposes to amend section 303.35 by 
adding the word ``fiber'' as set forth in section X below so that it 
states that the terms virgin or new shall not be used when the product, 
fiber or part so described is not composed wholly of new or virgin 
fiber.
(b) Advertising Disclosures
    Section 303.41(a) provides that the use of a fiber trademark in an 
advertisement shall require a full disclosure of the fiber content 
information at least once in the advertisement. In other words, the use 
of a fiber trademark triggers the Rule's fiber content disclosure. In 
contrast, this section does not require a full disclosure of fiber 
content information when a generic fiber name is used. This distinction 
conflicts with the Act, which requires such a disclosure in 
advertisements that disclose or imply fiber content.\45\ Accordingly, 
to conform the Rules to the Act, the Commission proposes to amend 
section 303.41(a) to state that the use of a fiber trademark or a 
generic fiber name in an advertisement shall require a full disclosure 
of the fiber content information required by the Act and regulations at 
least once in the advertisement.
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    \45\ See 15 U.S.C. 70b(c).
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    Section 303.42(a) also addresses the content and format of fiber 
disclosures in advertising. This provision implements the Textile Act's 
requirement that written textile fiber product advertisements 
disclosing or implying the presence of a fiber also disclose the 
product's full fiber content, ``except that the percentages of the 
fiber present in the textile fiber product need not be stated.''\46\ 
Section 303.42 implements this requirement but fails to explicitly 
state that advertising need not state the fiber percentages. 
Accordingly, the Commission proposes to amend the second sentence in 
section 303.42(a) by adding the following phrase: ``except that the 
advertisement need not state the percentage of each fiber.''
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    \46\ See 15 U.S.C. 70b(c).
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B. Country-of-Origin Disclosures

    Section 303.33 effectuates the Textile Act's requirement that 
textile fiber products have labels disclosing the country where they 
were processed or manufactured. Section 303.33(a) provides sample 
disclosures for products completely made in the United States, products 
made in the United States using imported materials, and products 
partially manufactured in a foreign country and partially manufactured 
in the United States.
    For the purpose of determining where an imported product was 
processed or manufactured (i.e., the country of origin), section 
303.33(d) provides that the country where the imported product was 
principally made shall be considered to be the country where such 
product was processed or manufactured. It also provides that further 
work or material added to the product in another country must effect a 
basic change in form to render such other country the place where such 
product was processed or manufactured.
    USA-ITA urged the Commission to consider revising section 303.33(d) 
to state that the country where imported

[[Page 29269]]

products were processed or manufactured (i.e., country of origin) is 
determined under the trade laws (i.e., Customs laws) requiring country-
of-origin labeling on imported products. USA-ITA argued that there is a 
conflict between the very detailed trade laws, specifically 19 U.S.C. 
3592, and the more general country-of-origin rule in section 303.33(d).
    The Commission recognized the interplay between the Rules and the 
Customs laws when it first promulgated the Rules in 1959.\47\ Indeed, 
the Rules state that ``[n]othing in this rule shall be construed as 
limiting in any way'' the disclosures required by ``any Tariff Act of 
the United States or regulations prescribed by the Secretary of the 
Treasury.''\48\ In 1985, the Commission reiterated this point, stating:
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    \47\ In that year, the pertinent section was 303.33(c). That 
text has remained unchanged. See Federal Trade Commission: Part 
303--Rules and Regulations Under the Textile Fiber Products 
Identification Act, 24 FR 4480, 4485 (June 2, 1959).
    \48\ Like paragraph (d), paragraph (f) remains unchanged since 
1959.

    In the past, regulations under the Textile Act have paralleled 
the regulations issued by Customs . . . To the maximum extent 
consistent with the legislative intent, the Commission intends the 
final regulations for the disclosure of the country of origin of 
imported textile . . . products . . . to be construed in a manner 
consistent with Customs regulations.\49\
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    \49\ Federal Trade Commission: Amendment to Rules and 
Regulations Under the Wool Products Labeling Act of 1939 and Textile 
Fiber Products Identification Act, Notice of Final Rulemaking, 50 FR 
15100 at 15101 (Apr. 15, 1985). This Notice compared the Customs 
regulations in 19 CFR 134 (1984) to 16 CFR 303.33 (1984).

Further, in 1998, to address an arguable inconsistency with certain 
Customs rulings implementing Section 334 of the Uruguay Round 
Agreements Act (``URAA''),\50\ the Commission amended section 303.33 to 
add clarifying examples of country-of-origin disclosures.\51\ In doing 
so, the Commission said that country-of-origin disclosures must comply 
with the requirements of both Commission and Customs laws and 
regulations.
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    \50\ 19 U.S.C. 3592.
    \51\ Federal Trade Commission: Rules and Regulations Under the 
Textile Fiber Products Identification Act, the Wool Products 
Labeling Act, and the Fur Products Labeling Act; Final Rule, 63 FR 
7508 at 7512-13 (Feb. 13, 1998). Specifically, the Commission 
explained that the URAA provides that the country of origin of 
certain categories of textiles (flat goods such as sheets, towels, 
comforters, handkerchiefs, scarves, and napkins) is the country 
where the fabric was created rather than the country where the 
fabric is used to manufacture the final product. As a result, 
identifying such products as having imported fabric, without 
identifying the fabric's country of origin, would arguably comply 
with the Textile Rules but would not comply with the Customs laws. 
The Commission stated that Commission staff had met with Customs 
staff, as well as industry representatives, and that any apparent 
inconsistency had been resolved. The Commission further stated that 
a U.S. manufacturer can comply with both the Customs and Textile 
Rules requirements by identifying the country of origin of the 
imported fabric and the fact that the final product was made in the 
United States (e.g., ``scarf made in USA of fabric made in China''). 
Id. at 7512.
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    Although the Commission has repeatedly noted its intent to ensure 
consistency between section 303.33 and the Customs laws, the trade laws 
and regulations applicable to textile fiber products have changed 
significantly. For example, in 1959, Customs regulations on marking 
imported products provided simply that the country of origin is the 
country where the product was first manufactured or substantially 
transformed.\52\
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    \52\ The regulation stated: ``The country of production or 
manufacture shall be considered the country of origin. Further work 
or material added to an article in another country must affect a 
substantial transformation in order to render such other country the 
`country of origin' within the meaning of this section.'' 19 CFR 
11.8(c)(1953).
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    The Rules follow a nearly identical approach to determining the 
origin of imported products even though they do not use identical 
terminology. However, Customs no longer uses ``substantial 
transformation'' to determine the origin of many imported textile 
products. Rather, the Customs law now contains detailed rules for 
determining the country of origin of imported textile products.\53\
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    \53\ See, e.g., 19 U.S.C. 3592 and 19 CFR 102.21 and 102.22.
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    Therefore, the Commission agrees that it should update section 
303.33(d) and (f) to better account for current Customs country-of-
origin regulations and the fact that Customs is now part of the 
Department of Homeland Security rather than the Department of the 
Treasury. Accordingly, the Commission proposes to update and clarify 
section 303.33(d) to state that an imported product's country of origin 
as determined under the laws and regulations enforced by Customs shall 
be the country where the product was processed or manufactured. The 
Commission also proposes to update section 303.33(f) by dropping the 
outdated reference to the Treasury Department and instead refer to any 
Tariff Act and the regulations promulgated thereunder. These amendments 
would revise the Rules to clearly reflect the Commission's longstanding 
policy of ensuring the consistency of the Textile Rules and Customs 
regulations and address USA-ITA's concerns.\54\
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    \54\ The Commission also notes that, under some circumstances, 
the Act and the Rules require disclosures in addition to but not in 
conflict with those required by Customs. For example, if an imported 
product is partially manufactured in the United States, section 
303.33(a)(4) requires the label to disclose the manufacturing 
processes that occurred in the foreign country and in the United 
States. This provision lists several examples of such disclosures, 
such as ``Made in [foreign country], finished in USA.''
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C. E-Commerce and Textile Guaranties

    The Rules already apply to and specifically address electronic 
commerce by, for example, defining the terms mail order catalog and 
mail order promotional material to include materials disseminated by 
electronic means.\55\ Nonetheless, NRF urged the Commission to amend 
the Rules to more effectively address certain aspects of electronic 
commerce and to modify the provisions applicable to guaranties. To 
address these concerns, the Commission proposes amending the definition 
of the terms invoice and invoice or other paper in section 303.1(h) and 
the guaranty provisions in sections 303.36, 303.37, and 303.38.
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    \55\ 16 CFR 303.1(u).
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1. Invoice or other paper
    NRF explained that businesses routinely send purchase orders, 
invoices, and related documents electronically, and that the product 
ordering and fulfillment process has become entirely electronic. 
Therefore, NRF recommended modifying the definition of invoice or other 
paper in section 303.1(h) to better address the increasing volume of 
electronic business, and ensure that those engaging in such business 
can comply fully with the Rules. Specifically, NRF recommended 
modifying the definition as follows (proposed changes in underline):

    The terms invoice and invoice or other paper mean an account, 
order, memorandum, list, or catalog, which is issued to a purchaser, 
consignee, bailee, correspondent, agent, or any other person, in 
writing or in some other form capable of being read or interpreted 
electronically and preserved in a tangible or electronic form, in 
connection with the marketing or handling of any textile fiber 
product transported or delivered to such person.

    The Commission finds this proposal problematic because the phrase 
``or interpreted electronically'' is ambiguous. The proposal does not 
indicate to what extent an invoice or other document capable of 
electronic interpretation could be read and understood by an individual 
responsible for complying with the Textile Act and Rules or how the 
electronic interpretation of invoices squares with the affirmative 
responsibility of buyers

[[Page 29270]]

and sellers to monitor and ensure that they comply with the Textile 
Rules.
    The Commission notes, however, that further clarification that 
invoices and other paper can be preserved electronically may be 
warranted.\56\ The Commission, therefore, proposes to amend section 
303.1(h) to: (1) Replace the word ``paper'' with the word ``document''; 
(2) state explicitly that such documents can be issued electronically; 
and (3) acknowledge that ESIGN, 15 U.S.C. 7001 et seq., allows for the 
preservation of records ``in a form that is capable of being accurately 
reproduced for later reference, whether by transmission, printing, or 
otherwise.''\57\ This amendment should address NRF's concerns.\58\
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    \56\ In 1998, the Commission modified the definition of invoice 
or other paper to clarify that such documents could be ``in writing 
or in some other form capable of being read and preserved in a 
tangible form.'' The Federal Register notice announcing the revision 
stated that the revision was meant ``to recognize that these 
documents may now be generated and disseminated electronically.'' 63 
FR 7508 at 7514 (Feb. 13, 1998). The comments, however, show that 
further clarification may be warranted.
    \57\ 15 U.S.C. 7001(d)(1).
    \58\ Sections 303.21, 303.31, 303.36, 303.38, and 303.44 
currently contain the phrase invoice or other paper. The Commission 
proposes to change the phrase to invoice or other document in each 
of these sections.
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2. E-Commerce and Separate Guaranties
    The Act provides that a business can avoid liability for selling a 
misbranded textile product if it received in good faith a guaranty that 
the product is not misbranded from a supplier or agent residing in the 
United States.\59\ NRF recommended adding the definition of electronic 
agent presently used in the Uniform Commercial Code \60\ and using the 
term in section 303.36 (Form of separate guaranty) to allow businesses 
to accept guaranties using electronic agents.\61\ The definition 
proposed by NRF for electronic agent specifically provides that the 
electronic acceptance of purchase orders would occur ``with or without 
review or action by an individual.'' NRF also urged the Commission to 
amend section 303.36 to allow numeric or alpha-numeric codes to satisfy 
existing name and address requirements for separate guaranties. The 
Commission declines to propose these amendments for the reasons 
explained below.
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    \59\ Section 7h(a) of the Textile Act provides: ``No person 
shall be guilty of an unlawful act under section 70a of this title 
if he establishes a guaranty received in good faith, signed by and 
containing the name and address of the person residing in the United 
States by whom the textile fiber product guaranteed was manufactured 
or from whom it was received, that said product is not misbranded or 
falsely invoiced under the provisions of this subchapter.''
    \60\ NRF urged the Commission to add a definition of electronic 
agent to section 303.1 to account for the use of electronic 
communications in the ordering and fulfillment processes. NRF 
proposed the definition of electronic agent used in section 2-211 of 
the Uniform Commercial Code:
    Electronic agent means a computer program or an electronic or 
other automated means used independently to initiate an action or 
respond to electronic records or performances in whole or in part, 
with or without review or action by an individual.
    \61\ Specifically, NRF recommended amending section 303.36 to 
describe an electronic guaranty process in which an individual or 
electronic agent places an order with a guarantor via transmission 
of an electronic purchase order that requests goods subject to 
specific terms and conditions including compliance with the Textile 
Fiber Products Identification Act and its regulations. An individual 
or electronic agent acting on behalf of the guarantor would confirm 
that the guarantor will fulfill the items and submits electronic 
confirmation of the same, and the guarantor would fulfill the order 
that is then accepted by the purchaser.
---------------------------------------------------------------------------

    The Commission notes that the Rules do not prohibit or discourage 
the electronic communication of textile guaranties. The Rule provisions 
relating to guaranties are not dependent on the mode of their 
communication. Instead, the Rules focus on the substance of the 
guaranties. It is unclear how the use of an electronic agent, which by 
definition may exclude individuals, adequately ensures that buyers and 
sellers will monitor compliance with the Rules, or how a buyer using an 
electronic agent can receive a guaranty in good faith so that it can 
rely on the guaranty.
    NRF also recommended allowing numeric or alpha-numeric codes to 
satisfy existing name and address requirements presently in section 
303.36.\62\ This is not necessary because section 303.36 does not 
require written signatures on separate guaranties and specifically 
provides that the printed name and address will suffice to meet the 
signature and address requirements. In addition, nothing in section 
303.36 prohibits electronic signatures. Comments have not presented any 
evidence showing that these alternatives are insufficient, impose 
significant costs on businesses, or that making the proposed change 
would decrease costs on businesses. Thus, this provision of the Rules 
appears to provide sufficient flexibility for compliance and the 
Commission does not see any reason to revise it. The Commission, seeks 
comment on these issues.
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    \62\ In connection with this recommendation, NRF also 
recommended that the Commission amend the ``Note'' in section 
303.36(a)(2) to allow the use of identifiers commonly used 
throughout the retailing industry in place of signatures and to 
expressly recognize that electronic signatures are permitted.
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3. Prescribed Forms for Continuing Guaranties
    Section 303.37 provides a prescribed form of a continuing guaranty 
a seller provides to a buyer and section 303.38 provides a prescribed 
form for a continuing guaranty a seller files with the Commission. Both 
require the entity providing a textile guaranty to sign the guaranty 
under penalty of perjury. NRF recommended making the guaranty form in 
section 303.37 optional and eliminating the requirement that the entity 
providing the guaranty sign under penalty of perjury. The Commission 
declines to propose the first amendment, but proposes to require that 
guarantors certify guaranties rather than sign them under penalty of 
perjury.
    First, NRF recommended making the form of continuing guaranty from 
seller to buyer in section 303.37 optional to allow businesses to adapt 
the form to electronic processes without the obligation to revert to 
paper documents and signatures. However, NRF did not present any 
evidence showing that the prescribed form is not adaptable to 
electronic communications, including electronic signatures. The 
prescribed form may be sent electronically, and there is no provision 
in the Textile Rules requiring written signatures as opposed to 
electronic signatures, as sanctioned by ESIGN.\63\ The Commission 
therefore declines to make the prescribed form optional. The Commission 
notes that the form is brief and consists only of a two sentence 
certification and a signature block stating the date, location, and 
name of the business making the guaranty, as well as the name, title, 
and signature of the person signing the guaranty under penalty of 
perjury.
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    \63\ The word ``signature'' appears in section 303.36 and 
303.37, and in the prescribed form for continuing guaranties filed 
with the Commission that appears as part of section 303.38. None of 
these provisions require written signatures or prohibit electronic 
signatures.
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    Second, NRF recommended that the Commission eliminate the penalty 
of perjury language for continuing guaranties. It argued that such a 
requirement inappropriately introduces the criminal elements of perjury 
into private contracts and that the person providing the attestation 
cannot attest to the truth of labels and invoices in the future.
    Although swearing under penalty of perjury in private agreements is 
not unusual,\64\ the Commission notes that

[[Page 29271]]

swearing to future events is problematic and may present enforcement 
issues. In addition, the Commission recognizes that many people who 
intend to comply with the Rules may be understandably reluctant to 
swear to a future event, and continuing guaranties address future 
shipments. Accordingly, the Commission proposes amending section 303.37 
to eliminate the penalty-of-perjury language.
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    \64\ See J. Geils Band Employee Benefit Plan v. Smith Barney 
Shearson, Inc., 76 F.3d 1245 (1st Cir. 1996)(Court upheld summary 
judgment in part because appellant failed to rebut acknowledgment of 
receipt of investment prospectuses evidenced by an agreement 
executed under penalty of perjury).
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    However, continuing guaranties must provide sufficient indicia of 
reliability to permit buyers to rely on them on an ongoing basis. The 
perjury language was included to address this concern. Therefore, 
instead of requiring guarantors to swear under penalty of perjury, the 
Commission proposes requiring them to acknowledge that providing a 
false guaranty is unlawful, and to certify that they will actively 
monitor and ensure compliance with the Textile Act and Rules. This 
requirement should focus guarantors' attention on, and underscore, 
their obligation to comply, thereby increasing a guaranty's 
reliability. However, it would not impose additional burdens on 
guarantors because they would simply be acknowledging the Textile Act's 
prohibition against false guaranties \65\ and certifying to the 
monitoring that they already must engage in to ensure that they do not 
provide false guaranties. In addition, the required statements would 
benefit recipients of guaranties by bolstering the basis of their good-
faith reliance on the guaranties. Finally, the acknowledgement and 
certification may facilitate enforcement action against those who 
provide false guaranties.
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    \65\ The Textile Act provides that furnishing a false guaranty 
``is unlawful, and shall be an unfair method of competition, and an 
unfair and deceptive act or practice'' under the FTC Act. 15 U.S.C. 
70h(b).
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    To further ensure the reliability of continuing guaranties, the 
Commission also proposes requiring them to be renewed annually. Annual 
renewal should encourage guarantors to take regular steps to ensure 
that they remain in compliance with the Act and Rules over time and 
thereby increase the guaranties' reliability. This requirement would 
not likely impose significant costs because it involves the sending of 
a relatively simple one-page form including information very similar, 
if not identical, to that provided on the guarantor's last continuing 
guaranty form.
    Accordingly, the Commission proposes amending section 303.37, 
relating to the requirements for continuing guaranties from sellers to 
buyers, to provide that the guarantor must: (1) Guaranty that all 
textile fiber products now being sold or which may hereafter be sold or 
delivered to the buyer are not, and will not be, misbranded nor falsely 
nor deceptively advertised or invoiced; (2) acknowledge that furnishing 
a false guaranty is an unlawful unfair and deceptive act or practice 
pursuant to the Federal Trade Commission Act; and (3) certify that it 
will actively monitor and ensure compliance with the Textile Act and 
Rules during the duration of the guaranty. The proposed amendment would 
also remove the requirement that guarantors sign under penalty of 
perjury and provide that guaranties are effective for one year instead 
of being effective until revoked.
    The Commission also proposes to revise FTC Form 31-A set forth in 
section 303.38 so that it is consistent with the guaranty provisions as 
amended. Because this form is also used to provide guaranties under the 
Fur and Wool Acts and references these Acts,\66\ and there is no reason 
to treat Fur and Wool guaranties differently than Textile guaranties, 
the Commission proposes to revise the form's references to Fur and Wool 
guaranties in the same way.\67\
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    \66\ Section 301.48(a)(3) of the Fur Rules and section 300.33(b) 
of the Wool Rules provide that the prescribed form for continuing 
guaranties filed with the Commission is found in section 303.38(b) 
of the Textile Rules. See also Wool Products Labeling Act of 1939, 
15 U.S.C. 68 et seq. and the Fur Products Labeling Act, 15 U.S.C. 69 
et seq.
    \67\ The comment that favored making the section 303.37 guaranty 
form optional did not ask the Commission to make use of form 31-A 
optional. Therefore, the Commission does not have any reason to 
believe that submitting continuing guaranties to the Commission 
using the form imposes unreasonable costs. Moreover, the form 
facilitates efficient processing of the continuing guaranties 
submitted to the Commission because it enables Commission staff to 
quickly identify missing information and advise submitters.
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4. Alternative to Textile Act Guaranty
    The Textile Act, 15 U.S.C. 70h, authorizes textile guaranties from 
persons ``residing in the United States by whom the textile fiber 
product guaranteed was manufactured or from whom it was received.'' 
\68\ Thus, businesses that buy from manufacturers or suppliers that 
have no representative residing in the United States cannot obtain a 
guaranty.
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    \68\ 15 U.S.C. 70h provides that a person relying on a guaranty, 
received in good faith, that a product is not misbranded or falsely 
invoiced from a guarantor residing in the United States will not be 
liable under the Act.
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    USA-ITA estimated that more than 90 percent of apparel products are 
imported. Although USA-ITA stated that it did not have a reliable 
estimate of the percentage imported directly by retailers, it asserted 
that the increase in imports makes it difficult for businesses that buy 
from manufacturers or suppliers that do not have a U.S. representative 
to obtain a guaranty.
    Because many retailers now regularly rely on global supply chains, 
NRF recommended that the Commission adopt an alternative guaranty for 
such businesses. Specifically, NRF recommended that the Commission 
allow such businesses to rely on compliance representations from 
foreign manufacturers or suppliers when: (1) The businesses do not 
embellish or misrepresent the representations; (2) the textile products 
are not sold as private label products; and (3) the businesses have no 
reason to know that the marketing or sale of the products would violate 
the Act or Rules.
    These comments have merit. Changes in the textile industry 
resulting in increased imports mean that more and more businesses 
cannot obtain guaranties. Based on its enforcement experience, the 
Commission finds it in the public interest to provide protections for 
retailers that: (1) Cannot legally obtain a guaranty under the Act; (2) 
do not embellish or misrepresent claims provided by the manufacturer 
related to the Act or Rules; and (3) do not market the products as 
private label products; unless the retailers knew or should have known 
that the marketing or sale of the products would violate the Act or 
Rules. Such protections provide greater consistency for retailers 
regardless of whether they directly import products or use third-party 
domestic importers. Accordingly, on January 3, 2013, the Commission 
announced an enforcement policy statement providing that it will not 
bring enforcement actions against retailers that meet the above 
criteria.\69\ This statement addresses the concerns raised by NRF.
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    \69\ See Enforcement Policy Regarding Certain Imported Textile, 
Wool, and Fur Products at http://www.ftc.gov/opa/2013/01/eps.shtm.
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D. Coverage and Exemptions From the Act and Rules

    Section 303.45 (Exclusions from the Act) has been the source of 
some confusion. The provision is phrased in terms of textile products 
excluded from operation of the Textile Act. However, instead of listing 
the excluded products, the provision lists 23 textile product 
categories that are not excluded. It then identifies the excluded 
product categories.
    To address this issue without changing the substance of this 
section, the Commission proposes amending the section so that paragraph 
(a) identifies

[[Page 29272]]

the textile fiber product categories subject to the Act and 
regulations, unless excluded from the Act's requirements in paragraph 
(b). New paragraph (b) provides that all textile fiber products other 
than those identified in paragraph (a) are excluded, as well as the 
exempted products identified in paragraph (b). The Commission also 
proposes revising current paragraphs (b) and (c) to reflect the above 
change and redesignating them as paragraphs (c) and (d), respectively.

V. Other Amendments the Commission Declines to Propose

    Several comments urged the Commission to address the disclosure of 
a business's identity, the provisions implementing the RN program, and 
disclosures in multiple languages. The Commission declines these 
requests either because the record does not include sufficient evidence 
to support them or the Commission lacks the authority to adopt them.

A. Proposals to Provide Additional Options for Identifying Businesses 
in Required Disclosures and To Modify the RN Program

    Several comments supported allowing businesses to use Canadian 
registered numbers as an alternative to U.S. registered numbers.\70\ 
AAFA stated that the use of identifying numbers approved by other 
countries would reduce costs, advance harmonization, and facilitate 
trade. NRF stated that recognizing the use of both Canadian CA numbers 
and U.S. RN numbers would support the free flow of products between the 
U.S. and Canada and reduce compliance costs for many U.S. retailers. 
USA-ITA stated that allowing alternative identifiers would make it 
easier to develop a label that meets the requirements of multiple 
jurisdictions.\71\
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    \70\ AAFA (17), CAF (19), NRF (20), USA-ITA (14).
    \71\ Prior to issuing this NPRM, the Commission's staff provided 
guidance stating that a business located outside the United States 
can comply with the business name label disclosure requirement by 
disclosing the business name of the textile product manufacturer or 
the RN or business name of a company in the United States that is 
directly involved with importing, distributing, or selling the 
product. For clarity purposes, the Commission notes here that a 
business located outside the United States that engages in commerce 
subject to the Act (e.g., such as an exporter engaged in the sale, 
offering for sale, advertising, delivery, or transportation of a 
covered textile product in the United States) may also comply with 
this requirement by disclosing its own business name on the label. 
See 15 U.S.C. 70a and 70b(b)(3) and 16 CFR 303.16.
---------------------------------------------------------------------------

    These proposals appear to have merit; however, the Textile Act 
provides only for the use of identifying numbers issued by the 
Commission.\72\ Thus, the Commission lacks the authority to amend the 
Rules to allow businesses to identify themselves on labels using 
numbers issued by other nations. In addition, the comments favoring 
this amendment did not provide any evidence on the costs and benefits 
of the proposal.\73\
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    \72\ 15 U.S.C. 70b(b)(3). See section 303.20 of the Rules.
    \73\ The Commission considered the possibility of amending the 
Rules to allow applicants to request specific numbers from the 
Commission, which would enable an applicant with a number issued by 
another nation to request that the Commission issue an identical 
number (assuming the Commission had not already issued the number to 
a different firm). This approach might address some of the concerns 
raised by the comments; however, it would also pose a significant 
risk of confusion to the extent that it resulted in the Commission 
issuing numbers that other nations or agencies had already issued to 
different firms. To avoid such confusion, the Commission would have 
to confirm that no other nation had issued the requested number to a 
different firm before issuing it to the applicant. Doing so would 
likely impose significant costs on the Commission. None of the 
comments suggested this approach and there is no evidence in the 
record supporting it.
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    Two comments addressed the deceptive use of RN numbers. 
Specifically, Karen Lunde and Classical Silk, Inc., noted that there is 
no penalty when someone uses another company's RN number. Lunde 
recommended that the Commission amend the Rules to impose legal 
consequences, such as monetary fines, on companies that deceptively use 
RN numbers, and that the Commission take enforcement action against 
violators. Lunde also suggested that the Textile Rules hold retailers 
and wholesalers responsible for checking and verifying that RN numbers 
are accurate and not stolen, and allow companies to which RN numbers 
are issued to recover all costs in defending themselves against 
companies that fraudulently use RN numbers.
    These comments also recommended changes to prevent the deceptive 
use of RN numbers. Lunde recommended requiring a signature under 
penalty of perjury on applications to obtain or renew numbers. Both 
Lunde and Classical Silk recommended that the Commission require the 
renewal of RN numbers every few years, in part to ensure that company 
addresses are regularly updated. Lunde recommended that the FTC make 
available a database to allow companies to check and verify that RN 
numbers are correct and actually are from the suppliers of the 
garments. Classical Silk recommended that the Commission make the date 
of application; the name of the person submitting and certifying the 
application; the title of that person; that person's email address; and 
the Web site URL address available to the public.
    The Commission declines to propose these amendments because the 
Commission lacks the authority to adopt them, the record does not 
support them, or they are unnecessary. Section 303.20(b)(1) already 
provides that ``Registered identification numbers shall be used only by 
the person or concern to whom they are issued, and such numbers are not 
transferable or assignable.'' The Commission has the authority to 
enforce this provision by seeking injunctive or other equitable relief 
from violators.\74\ The Commission, however, does not have the 
authority under the Textile Act or the FTC Act to seek civil penalties 
from those who violate this provision, or to authorize businesses with 
RN numbers to recover all costs in defending themselves against those 
who use their RN numbers fraudulently.
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    \74\ See 15 U.S.C. 45 and 53(b).
---------------------------------------------------------------------------

    Although the Commission has the authority to implement some of the 
other proposals, and they potentially could reduce the misuse of RN 
numbers, Lunde and Classical Silk did not provide information showing 
that there is a widespread problem with the unauthorized use of RN 
numbers or evidence on the costs and benefits of the changes to the RN 
program they advocated. Some of the changes, such as requiring 
retailers and wholesalers to check and verify RN numbers and creating 
or expanding RN databases, would likely increase industry compliance 
costs or the Commission's cost of administering the program. Others, 
such as identifying the person submitting an RN application and 
providing his or her email address, would involve disclosing 
information about RN applicants that the applicants may have legitimate 
privacy concerns about disclosing. Furthermore, it is not clear whether 
these changes would have any significant impact on the misuse of RN 
numbers identified by the two commenters. Accordingly, the Commission 
declines these proposals at this time.

B. The Use of Multiple Languages in Required Disclosures

    The Textile Rules already allow multiple language disclosures.\75\ 
The comments stated that allowing

[[Page 29273]]

disclosures in multiple languages benefits consumers, including 
American consumers for whom English is not their first language.\76\ 
AAFA and McNeese stated that multiple language labels are not confusing 
to U.S. consumers. The comments also stated that allowing disclosures 
in multiple languages benefits businesses.\77\ AAFA noted that its 
members source and distribute products around the globe, and that it is 
therefore important to make the information on labels accessible for 
consumers in multiple markets. CAF noted that textile labels in 
multiple languages allow the textile industry to ``rationalize'' 
production and produce garments with a single labeling scheme 
appropriate for multiple markets. USA-ITA noted that multilingual 
labels create efficiencies and lower costs for those who market textile 
products in multiple national markets. McNeese stated that multiple 
language labels reduce costs for U.S. and EU textile manufacturers, and 
are consistent with regulatory cooperation efforts between the U.S. and 
the EU.
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    \75\ Six comments addressed this issue: AAFA (17), Bureau 
Veritas (9), CAF (19), C&R (6), McNeese (4), and USA-ITA (14). C&R 
(6) urged the Commission to clarify whether inclusion of multiple 
languages is permitted, which the Commission reiterates here. Some 
of the comments incorrectly interpreted the Commission's request for 
comments relating to the use of multiple languages on labels as a 
proposal to prohibit the practice.
    \76\ AAFA (17) and CAF (19).
    \77\ AAFA (17), CAF (19), McNeese (4), and USA-ITA (14).
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    The ANPR asked whether the Commission should ``consider consumer 
education or other measures to help non-English-speaking consumers 
obtain the information that must be disclosed under the Textile Act and 
Rules.'' \78\ Bureau Veritas stated that fiber content labels in 
multiple languages can be confusing and/or difficult to read, and 
recommended that the Commission prescribe acceptable format(s) to avoid 
confusion.\79\ Bureau Veritas suggested two formats, one that groups 
required disclosures by language (e.g., English disclosures together, 
French disclosures together), and another that combines different 
languages for the required disclosures (e.g., ----% generic fiber name 
in English/other language). The Commission declines to propose amending 
the Rules to specify particular formats for making disclosures in 
multiple languages. The record does not include any evidence regarding 
how consumers interpret labels in multiple languages, whether current 
disclosures using multiple languages confuse consumers, or whether any 
particular format for using multiple languages is superior to others. 
In addition, none of the comments proposed other measures to help non-
English speaking consumers obtain the information disclosed pursuant to 
the Act and Rules. The Commission may provide additional guidance on 
using multiple languages in its business education materials if it 
obtains information enabling it to do so.\80\
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    \78\ See ANPR question 20(a). Question 16 asked: ``Should the 
Commission modify Section 303.16(c) or consider any additional 
measures regarding non-required information such as the voluntary 
use of multilingual labels?''
    \79\ C&R (6) was uncertain whether multiple language disclosures 
were permitted and, if so, how to make such disclosures, but did not 
propose any particular format.
    \80\ Several comments urged the Commission to clarify its 
business education materials and to provide examples of preferred 
disclosure formats in advertising, including Internet advertising, 
and to make them available in both PDF and HTML formats. The 
Commission plans to do so.
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VI. Request for Comments

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before July 8, 2013. 
Write ``Textile Rules, 16 CFR part 303, Project No. P948404'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment doesn't include any 
sensitive personal information, such as anyone's Social Security 
number, date of birth, driver's license number or other state 
identification number or foreign country equivalent, passport number, 
financial account number, or credit or debit card number. You are also 
solely responsible for making sure that your comment does not include 
any sensitive health information, such as medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is obtained from any person and which is privileged or 
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do 
not include competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\81\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \81\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/textilerulesnprm, by following the instruction on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``Textile Rules, 16 CFR 
Part 303, Project No. P948404'' on your comment and on the envelope, 
and mail or deliver it to the following address: Federal Trade 
Commission, Office of the Secretary, Room H-113 (Annex G), 600 
Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
NPRM and the news release describing it. The FTC Act and other laws 
that 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 on or before July 8, 2013. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
    The Commission invites members of the public to comment on any 
issues or concerns they believe are relevant or appropriate to the 
Commission's consideration of proposed amendments to the Textile Rules. 
The Commission requests that comments provide factual data upon which 
they are based. In addition to the issues raised above, the Commission 
solicits public comment on the costs and benefits to industry members 
and consumers of each of the proposals as well as the specific 
questions identified below. These questions are designed to assist the 
public and should not be construed as a limitation on the issues on 
which public comment may be submitted.

[[Page 29274]]

Questions

    1. General Questions on Amendments: To maximize the benefits and 
minimize the costs for buyers and sellers (including small businesses), 
the Commission seeks views and data on the following general questions 
for each of the proposed changes described in this NPRM:
    (A) What benefits would a proposed change confer and on whom? The 
Commission in particular seeks information on any benefits a change 
would confer on consumers of textile fiber products.
    (B) What costs or burdens would a proposed change impose and on 
whom? The Commission in particular seeks information on any burdens a 
change would impose on small businesses.
    (C) What regulatory alternatives to the proposed changes are 
available that would reduce the burdens of the proposed changes while 
providing the same benefits?
    (D) What evidence supports your answers?
    2. Hang-tags and Fiber Content Disclosures:
    (A) Would the proposed amendment to section 303.17 allowing hang-
tags without full fiber content disclosures under certain circumstances 
affect the extent to which consumers become informed about the full 
fiber content of textile fiber products? If so, how?
    (B) Would the proposed disclosure requirements for hang-tags not 
disclosing full fiber content (i.e., ``This tag does not disclose the 
product's full fiber content'' or ``See other label for the product's 
full fiber content'') prevent deception or confusion regarding fiber 
content? If so, how? Should the Commission provide different or 
additional examples of the required hang-tag disclosures? If so, what?
    (C) What evidence supports your answers?
    3. Electronic Signatures and Guaranties:
    (A) Do the Textile Rules and the proposed changes to the guaranty 
provisions in sections 303.36, 303.37, and 303.38 provide sufficient 
flexibility for compliance using electronic transmittal of guaranties? 
If so, why and how? If not, why not?
    (B) Should the Commission revise the proposed certification 
requirement for continuing guaranties provided by suppliers pursuant to 
sections 303.37 and 303.38? If so, why and how? If not, why not?
    (C) Should the Rules require those providing a continuing guaranty 
pursuant to sections 303.37 and 303.38 to renew the certification 
annually or at some other interval? If so, why? If not, why not? To 
what extent would requiring guarantors to renew certifications annually 
increase costs?
    (D) What evidence supports your answers?

VII. Communications To Commissioners and Commissioner Advisors By 
Outside Parties

    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.\82\
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    \82\ See 16 CFR 1.26(b)(5).
---------------------------------------------------------------------------

VIII. Regulatory Flexibility Act Requirements

    The Regulatory Flexibility Act (``RFA'') \83\ requires that the 
Commission conduct an analysis of the anticipated economic impact of 
the proposed amendments on small entities. The purpose of a regulatory 
flexibility analysis is to ensure that an agency considers the impacts 
on small entities and examines regulatory alternatives that could 
achieve the regulatory purpose while minimizing burdens on small 
entities. Section 605 of the RFA \84\ provides that such an analysis is 
not required if the agency head certifies that the regulatory action 
will not have a significant economic impact on a substantial number of 
small entities.
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    \83\ 5 U.S.C. 601-612.
    \84\ 5 U.S.C. 605.
---------------------------------------------------------------------------

    The Commission believes that the proposed amendments would not have 
a significant economic impact upon small entities, although it may 
affect a substantial number of small businesses. The proposed 
amendments: (a) Clarify the Rules, including sections 303.1(h),\85\ 
303.12(a), 303.33(d) and (f), 303.35, 303.41(a), 303.42(a), and 303.45; 
(b) amend section 303.7 to incorporate the updated version of ISO 2076, 
thereby establishing the generic names for the manufactured fibers set 
forth in the current ISO standard; (c) amend section 303.17(b) to allow 
manufacturers and importers to disclose fiber names and trademarks and 
information about fiber performance on certain hang-tags affixed to 
textile fiber products without including the product's full fiber 
content information on the hang-tag; and (d) amend sections 303.36, 
303.37, and 303.38 to clarify and update the Rules' guaranty provisions 
by, among other things, replacing the requirement that suppliers that 
provide a guaranty sign under penalty of perjury with a certification 
requirement for continuing guaranties that must be renewed every year.
---------------------------------------------------------------------------

    \85\ This amendment would also require parallel revisions to 
sections 303.21, 303.31, 303.36, 303.38, and 303.44.
---------------------------------------------------------------------------

    In the Commission's view, the proposed amendments should not have a 
significant or disproportionate impact on the costs of small entities 
that manufacture or import textile fiber products. Therefore, based on 
available information, the Commission certifies that amending the Rules 
as proposed will not have a significant economic impact on a 
substantial number of small businesses.
    Although the Commission certifies under the RFA that the proposed 
amendments would not, if promulgated, have a significant impact on a 
substantial number of small entities, the Commission has determined, 
nonetheless, that it is appropriate to publish an Initial Regulatory 
Flexibility Analysis 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 Taken

    In response to public comments, the Commission proposes amending 
the Rules to respond to changed commercial practices and updated 
industry standards.

B. Statement of the Objectives of, and Legal Basis for, the Proposed 
Amendments

    The objective of the proposed amendments is to clarify the Rules; 
incorporate the updated version of ISO 2076, thereby establishing the 
generic names for the manufactured fibers set forth in the current ISO 
standard; allow manufacturers and importers to disclose fiber names and 
trademarks and information about fiber performance on certain hang-tags 
affixed to textile fiber products without including the product's full 
fiber content information on the hang-tag; and clarify and update the 
Rules' guaranty provisions by, among other things, replacing the 
requirement that suppliers that provide a guaranty sign under penalty 
of perjury with a certification requirement that must be renewed every 
year. The Textile Act authorizes the Commission to implement its 
requirements through the issuance of rules.
    The proposed amendments would clarify and update the Rules, and 
provide covered entities with additional labeling options without 
imposing significant new burdens or additional costs. For example, 
businesses that prefer not to affix a hang-tag disclosing a fiber 
trademark without disclosing the

[[Page 29275]]

product's full fiber content need not do so. The proposal that 
continuing guaranty certifications expire after one year would likely 
impose minimal additional costs on businesses that choose to provide a 
guaranty. Providing a new continuing guaranty each year would likely 
entail minimal costs, especially if the business provides the guaranty 
electronically or as part of a paper invoice that it would have sent to 
the buyer in any event. In addition, the new guaranty would consist of 
a relatively simple one-page form including information very similar, 
if not identical, to that provided on the guarantor's last continuing 
guaranty form.

C. Small Entities to Which the Proposed Amendments Will Apply

    The Rules apply to various segments of the textile fiber product 
industry, including manufacturers and wholesalers of textile apparel 
products. Under the Small Business Size Standards issued by the Small 
Business Administration, textile apparel manufacturers qualify as small 
businesses if they have 500 or fewer employees. Clothing wholesalers 
qualify as small businesses if they have 100 or fewer employees. The 
Commission's staff has estimated that approximately 22,218 textile 
fiber product manufacturers and importers are covered by the Rules' 
disclosure requirements.\86\ A substantial number of these entities 
likely qualify as small businesses. The Commission estimates that the 
proposed amendments will not have a significant impact on small 
businesses because they do not impose any significant new obligations 
on them. The Commission seeks comment and information with regard to 
the estimated number or nature of small business entities for which the 
proposed amendments would have a significant impact.
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    \86\ Federal Trade Commission: Agency Information Collection 
Activities; Proposed Collection; Comment Request, 76 FR 77230 (Dec. 
12, 2011).
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements, Including Classes of Covered Small Entities and 
Professional Skills Needed to Comply

    As explained earlier in this document, the proposed amendments 
clarify the Rules; incorporate the updated version of ISO 2076, thereby 
establishing the generic names for the manufactured fibers set forth in 
the current ISO standard; allow manufacturers and importers to disclose 
fiber names and trademarks and information about fiber performance on 
certain hang-tags affixed to textile fiber products without including 
the product's full fiber content information on the hang-tag; and 
clarify and update the Rules' guaranty provisions by, among other 
things, replacing the requirement that suppliers that provide a 
guaranty sign under penalty of perjury with a certification requirement 
that must be renewed every year. The small entities potentially covered 
by these proposed amendments will include all such entities subject to 
the Rules. The professional skills necessary for compliance with the 
Rules as modified by the proposed amendments would include office and 
administrative support supervisors to determine label content and 
clerical personnel to draft and obtain labels and keep records. The 
Commission invites comment and information on these issues.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    The Commission has not identified any other federal statutes, 
rules, or policies that would duplicate, overlap, or conflict with the 
proposed amendments. The Commission invites comment and information on 
this issue.

F. Significant Alternatives to the Proposed Amendments

    The Commission has not proposed any specific small entity exemption 
or other significant alternatives, as the proposed amendments simply 
clarify the Rules; incorporate the updated version of ISO 2076, thereby 
establishing the generic names for the manufactured fibers set forth in 
the current ISO standard; allow manufacturers and importers to disclose 
fiber names and trademarks and information about fiber performance on 
certain hang-tags affixed to textile fiber products without including 
the product's full fiber content information on the hang-tag; and 
clarify and update the Rules' guaranty provisions by, among other 
things, replacing the requirement that suppliers that provide a 
guaranty sign under penalty of perjury with a certification requirement 
that must be renewed every year. Under these limited circumstances, the 
Commission does not believe a special exemption for small entities or 
significant compliance alternatives are necessary or appropriate to 
minimize the compliance burden, if any, on small entities while 
achieving the intended purposes of the proposed amendments. 
Nonetheless, the Commission seeks comment and information on the need, 
if any, for alternative compliance methods that would reduce the 
economic impact of the Rules on small entities. If the comments filed 
in response to this NPRM identify small entities that would be affected 
by the proposed amendments, as well as alternative methods of 
compliance that would reduce the economic impact of the proposed 
amendments on such entities, the Commission will consider the 
feasibility of such alternatives and determine whether they should be 
incorporated into the final Rules.

IX. Paperwork Reduction Act

    The Rules contain various ``collection of information'' (e.g., 
disclosure and recordkeeping) requirements for which the Commission has 
obtained OMB clearance under the Paperwork Reduction Act (``PRA'').\87\ 
As discussed above, the Commission proposes: (a) Clarifying the Rules, 
including sections 303.1(h),\88\ 303.12(a), 303.33(d) and (f), 303.35, 
303.41(a), 303.42(a), and 303.45; (b) amending section 303.7 to 
incorporate the updated version of ISO 2076, thereby establishing the 
generic names for the manufactured fibers set forth in the current ISO 
standard; (c) amending section 303.17(b) to allow manufacturers and 
importers to disclose fiber names and trademarks and information about 
fiber performance on certain hang-tags affixed to textile fiber 
products without including the product's full fiber content information 
on the hang-tag; and (d) amending sections 303.36, 303.37, and 303.38 
to clarify and update the Rules' guaranty provisions by, among other 
things, replacing the requirement that suppliers provide a guaranty 
signed under penalty of perjury with a certification requirement for 
continuing guaranties that must be renewed every year.
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    \87\ 44 U.S.C. 3501 et seq. The Commission recently published 
its PRA burden estimates for the current information collection 
requirements under the Rules. See Federal Trade Commission: Agency 
Information Collection Activities; Proposed Collection; Comment 
Request, 76 FR 77230 (Dec. 12, 2011) and Federal Trade Commission: 
Agency Information Collection Activities; Submission for OMB Review; 
Comment Request, 77 FR 10744 (Feb. 23, 2012). On March 26, 2012, OMB 
granted clearance through March 31, 2015, for these requirements and 
the associated PRA burden estimates. The OMB control number is 3084-
0101.
    \88\ This amendment would also require parallel revisions to 
sections 303.21, 303.31, 303.36, 303.38, and 303.44.
---------------------------------------------------------------------------

    These proposed amendments do not impose any additional significant 
collection of information requirements. Businesses that prefer not to 
affix a hang-tag disclosing a fiber name or trademark without 
disclosing the product's full fiber content need not do so. The 
proposal that continuing guaranty certifications expire after one

[[Page 29276]]

year would likely impose minimal additional costs on businesses that 
choose to provide a guaranty. Providing a new continuing guaranty each 
year would likely entail minimal costs, especially if the business 
provides the guaranty electronically or as part of a paper invoice that 
it would have sent to the buyer in any event.

X. Proposed Rule Language

List of Subjects in 16 CFR Part 303

    Advertising, Labeling, Recordkeeping, Textile fiber products.

PART 303--RULES AND REGULATIONS UNDER THE TEXTILE FIBER PRODUCTS 
IDENTIFICATION ACT

0
1. The authority citation for part 303 continues to read as follows:


    Authority: 15 U.S.C. 70 et seq.

0
2. Amend Sec.  303.1 by revising paragraph (h) to read as follows:


Sec.  303.1  Terms defined.

* * * * *
    (h) The terms invoice and invoice or other document mean an 
account, order, memorandum, list, or catalog, which is issued to a 
purchaser, consignee, bailee, correspondent, agent, or any other 
person, electronically, in writing, or in some other form capable of 
being read and preserved in a form that is capable of being accurately 
reproduced for later reference, whether by transmission, printing, or 
otherwise, in connection with the marketing or handling of any textile 
fiber product transported or delivered to such person.
* * * * *
0
3. Amend Sec.  303.7 by revising the introductory text to read as 
follows:


Sec.  303.7  Generic names and definitions for manufactured fibers.

    Pursuant to the provisions of section 7(c) of the Act, the 
Commission hereby establishes the generic names for manufactured 
fibers, together with their respective definitions, set forth in this 
section, and the generic names for manufactured fibers, together with 
their respective definitions, set forth in International Organization 
for Standardization ISO 2076:2010(E), ``Textiles--Man-made fibres--
Generic names.'' This incorporation 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 may be obtained from the American National 
Standards Institute, 11 West 42nd St., 13th Floor, New York, NY 10036. 
Copies may be inspected at the Federal Trade Commission, Room 130, 600 
Pennsylvania Avenue NW., Washington, DC 20580, 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/cfr/ibr-locations.html.
* * * * *
0
4. Amend Sec.  303.12 by revising paragraph (a) to read as follows:


Sec.  303.12  Trimmings of household textile articles.

    (a) Pursuant to section 12 of the Act, trimmings incorporated in 
articles of wearing apparel and other household textile articles are 
exempt from the Act and regulations, except for decorative trim, 
decorative patterns and designs, and elastic materials in findings 
exceeding the surface area thresholds described and in paragraph (b) of 
this section. Trimmings may, among other forms of trim, include:
    (1) Rickrack, tape, belting, binding, braid, labels (either 
required or non-required), collars, cuffs, wrist bands, leg bands, 
waist bands, gussets, gores, welts, and findings, including 
superimposed garters in hosiery, and elastic materials and threads 
inserted in or added to the basic product or garment in minor 
proportion for holding, reinforcing or similar structural purposes;
    (2) Decorative trim, whether applied by embroidery, overlay, 
applique, or attachment; and
    (3) Decorative patterns or designs which are an integral part of 
the fabric out of which the household textile article is made. 
Provided, That such decorative trim or decorative pattern or design, as 
specified in paragraphs (a)(2) and (3) of this section, does not exceed 
15 percent of the surface area of the household textile article. If no 
representation is made as to the fiber content of the decorative trim 
or decoration, as provided for in paragraphs (a)(2) and (3) of this 
section, and the fiber content of the decorative trim or decoration 
differs from the fiber content designation of the basic fabric, the 
fiber content designation of the basic fabric shall be followed by the 
statement ``exclusive of decoration.''
* * * * *
0
5. Revise Sec.  303.17(b) to read as follows:


Sec.  303.17  Use of fiber trademarks and generic names on labels.

* * * * *
    (b) Where a generic name or a fiber trademark is used on any label 
providing required information, a full fiber content disclosure shall 
be made in accordance with the Act and regulations the first time the 
generic name or fiber trademark appears on the label. Where a fiber 
generic name or trademark is used on any hang-tag attached to a textile 
fiber product that has a label providing required information and the 
hang-tag provides non-required information, such as a hang-tag stating 
only a fiber generic name or trademark or providing information about a 
particular fiber's characteristics, the hang-tag need not provide a 
full fiber content disclosure; however, if the textile fiber product 
contains any fiber other than the fiber identified by the fiber generic 
name or trademark, the hang-tag must disclose clearly and conspicuously 
that it does not provide the product's full fiber content; for example:
    ``This tag does not disclose the product's full fiber content.''
    or
    ``See label for the product's full fiber content.''
* * * * *
0
6. Amend Sec.  303.21 by revising paragraphs (a)(3) and (b) to read as 
follows:


Sec.  303.21  Marking of samples, swatches, or specimens and products 
sold therefrom.

    (a) * * *
    (3) If such samples, swatches, or specimens are not used to effect 
sales to ultimate consumers and are not in the form intended for sale 
or delivery to, or for use by, the ultimate consumer, and are 
accompanied by an invoice or other document showing the required 
information.
    (b) Where properly labeled samples, swatches, or specimens are used 
to effect the sale of articles of wearing apparel or other household 
textile articles which are manufactured specifically for a particular 
customer after the sale is consummated, the articles of wearing apparel 
or other household textile articles need not be labeled if they are of 
the same fiber content as the samples, swatches, or specimens from 
which the sale was effected and an invoice or other document 
accompanies them showing the information otherwise required to appear 
on the label.
* * * * *
0
7. Revise Sec.  303.31 to read as follows:


Sec.  303.31  Invoice in lieu of label.

    Where a textile fiber product is not in the form intended for sale, 
delivery to, or for use by the ultimate consumer, an invoice or other 
document may be used in lieu of a label, and such invoice or other 
document shall show, in addition to the name and address of the person

[[Page 29277]]

issuing the invoice or other document, the fiber content of such 
product as provided in the Act and regulations as well as any other 
required information.
0
8. Amend Sec.  303.33, by revising paragraphs (d) and (f) to read as 
follows:


Sec.  303.33  Country where textile fiber products are processed or 
manufactured.

* * * * *
    (d) The country of origin of an imported textile fiber product as 
determined under the laws and regulations enforced by United States 
Customs and Border Protection shall be considered to be the country 
where such textile fiber product was processed or manufactured.
* * * * *
    (f) Nothing in this rule shall be construed as limiting in any way 
the information required to be disclosed on labels under the provisions 
of any Tariff Act of the United States or regulations promulgated 
thereunder.
0
9. Revise Sec.  303.35 to read as follows:


Sec.  303.35  Use of terms ``virgin'' or ``new.''

    The terms virgin or new as descriptive of a textile fiber product, 
or any fiber or part thereof, shall not be used when the product, fiber 
or part so described is not composed wholly of new or virgin fiber 
which has never been reclaimed from any spun, woven, knitted, felted, 
bonded, or similarly manufactured product.
    10. Amend Sec.  303.36 by revising the introductory text of 
paragraph (a) and paragraphs (a)(2) and (b), to read as follows:


Sec.  303.36  Form of separate guaranty.

    (a) The following are suggested forms of separate guaranties under 
section 10 of the Act which may be used by a guarantor residing in the 
United States on or as part of an invoice or other document relating to 
the marketing or handling of any textile fiber products listed and 
designated therein, and showing the date of such invoice or other 
document and the signature and address of the guarantor.
* * * * *
    (2) Guaranty based on guaranty. Based upon a guaranty received, we 
guaranty that the textile fiber products specified herein are not 
misbranded nor falsely nor deceptively advertised or invoiced under the 
provisions of the Textile Fiber Products Identification Act and rules 
and regulations thereunder.

    Note: The printed name and address on the invoice or other 
document will suffice to meet the signature and address 
requirements.

    (b) The mere disclosure of required information including the fiber 
content of a textile fiber product on a label or on an invoice or other 
document relating to its marketing or handling shall not be considered 
a form of separate guaranty.
0
11. Revise Sec.  303.37 to read as follows:


Sec.  303.37  Form of continuing guaranty from seller to buyer.

    Under section 10 of the Act, a seller residing in the United States 
may give a buyer a continuing guaranty to be applicable to all textile 
fiber products sold or to be sold. The following is the prescribed form 
of continuing guaranty from seller to buyer.
    We, the undersigned, guaranty that all textile fiber products now 
being sold or which may hereafter be sold or delivered to ------ are 
not, and will not be misbranded or falsely or deceptively advertised or 
invoiced under the provisions of the Textile Fiber Products 
Identification Act and rules and regulations thereunder. We acknowledge 
that furnishing a false guaranty is an unlawful, unfair and deceptive 
act or practice pursuant to the Federal Trade Commission Act, and 
certify that we will actively monitor and ensure compliance with the 
Textile Fiber Products Identification Act and rules and regulations 
thereunder during the duration of this guaranty. This guaranty is 
effective for one year from the date of this certification.
    Dated, signed, and certified this ---- day of ----, 20 --, at ----
-- (City), -- (State or Territory) ------ (name under which business is 
conducted.)
    I certify that the information supplied in this form is true and 
correct.

-----------------------------------------------------------------------

Signature of Proprietor, Principal Partner, or Corporate Official

-----------------------------------------------------------------------

Name (Print or Type) and Title

0
12. Amend Sec.  303.38 by revising paragraphs (a)(2), (b) and (c) to 
read as follows:


Sec.  303.38  Continuing guaranty filed with Federal Trade Commission.

    (a) * * *
    (2) Continuing guaranties filed with the Commission shall continue 
in effect for one year unless revoked earlier. The guarantor shall 
promptly report any change in business status to the Commission.
* * * * *
    (b) Prescribed form for a continuing guaranty:
BILLING CODE 6750-01-P

[[Page 29278]]

[GRAPHIC] [TIFF OMITTED] TP20MY13.000

BILLING CODE 6750-01-C
    (c) Any person who has a continuing guaranty on file with the 
Commission may, during the effective dates of the guaranty, give notice 
of such fact by setting forth on the invoice or other document covering 
the marketing or handling of the product guaranteed the following:
    Continuing guaranty under the Textile Fiber Products Identification 
Act filed with the Federal Trade Commission.
* * * * *
0
13. Amend Sec.  303.41 by revising paragraph (a) as follows:


Sec.  303.41  Use of fiber trademarks and generic names in advertising.

    (a) In advertising textile fiber products, the use of a fiber 
trademark or a generic fiber name shall require a full disclosure of 
the fiber content information required by the Act and regulations in at 
least one instance in the advertisement.
* * * * *
0
14. Amend Sec.  303.42, by revising paragraph (a) to read as follows:


Sec.  303.42  Arrangement of information in advertising textile fiber 
products.

    (a) Where a textile fiber product is advertised in such manner as 
to require

[[Page 29279]]

disclosure of the information required by the Act and regulations, all 
parts of the required information shall be stated in immediate 
conjunction with each other in legible and conspicuous type or 
lettering of equal size and prominence. In making the required 
disclosure of the fiber content of the product, the generic names of 
fibers present in an amount 5 percent or more of the total fiber weight 
of the product, together with any fibers disclosed in accordance with 
Sec.  303.3(a), shall appear in order of predominance by weight, to be 
followed by the designation ``other fiber'' or ``other fibers'' if a 
fiber or fibers required to be so designated are present. The 
advertisement need not state the percentage of each fiber.
* * * * *
0
15. Revise Sec.  303.44 to read as follows:


Sec.  303.44  Products not intended for uses subject to the Act.

    Textile fiber products intended for uses not within the scope of 
the Act and regulations or intended for uses in other textile fiber 
products which are exempted or excluded from the Act shall not be 
subject to the labeling and invoicing requirements of the Act and 
regulations: Provided, An invoice or other document covering the 
marketing or handling of such products is given, which indicates that 
the products are not intended for uses subject to the Textile Fiber 
Products Identification Act.
0
16. Revise Sec.  303.45 to read as follows:


Sec.  303.45  Coverage and exclusions from the act.

    (a) The following textile fiber products are subject to the Act and 
regulations, unless excluded from the Act's requirements in paragraph 
(b) of this section:
    (1) Articles of wearing apparel;
    (2) Handkerchiefs;
    (3) Scarfs;
    (4) Beddings;
    (5) Curtains and casements;
    (6) Draperies;
    (7) Tablecloths, napkins, and doilies;
    (8) Floor coverings;
    (9) Towels;
    (10) Wash cloths and dish cloths;
    (11) Ironing board covers and pads;
    (12) Umbrellas and parasols;
    (13) Batts;
    (14) Products subject to section 4(h) of the Act;
    (15) Flags with heading or more than 216 square inches (13.9 dm\2\) 
in size;
    (16) Cushions;
    (17) All fibers, yarns and fabrics (including narrow fabrics except 
packaging ribbons);
    (18) Furniture slip covers and other covers or coverlets for 
furniture;
    (19) Afghans and throws;
    (20) Sleeping bags;
    (21) Antimacassars and tidies;
    (22) Hammocks; and
    (23) Dresser and other furniture scarfs.
    (b) Pursuant to section 12(b) of the Act, all textile fiber 
products other than those identified in paragraph (a) of this section, 
and the following textile fiber products, are excluded from the Act's 
requirements:
    (1) Belts, suspenders, arm bands, permanently knotted neckties, 
garters, sanitary belts, diaper liners, labels (either required or non-
required) individually and in rolls, looper clips intended for 
handicraft purposes, book cloth, artists' canvases, tapestry cloth, and 
shoe laces.
    (2) All textile fiber products manufactured by the operators of 
company stores and offered for sale and sold exclusively to their own 
employees as ultimate consumers.
    (3) Coated fabrics and those portions of textile fiber products 
made of coated fabrics.
    (4) Secondhand household textile articles which are discernibly 
secondhand or which are marked to indicate their secondhand character.
    (5) Non-woven products of a disposable nature intended for one-time 
use only.
    (6) All curtains, casements, draperies, and table place mats, or 
any portions thereof otherwise subject to the Act, made principally of 
slats, rods, or strips, composed of wood, metal, plastic, or leather.
    (7) All textile fiber products in a form ready for the ultimate 
consumer procured by the military services of the United States which 
are bought according to specifications, but shall not include those 
textile fiber products sold and distributed through post exchanges, 
sales commissaries, or ship stores; provided, however, that if the 
military services sell textile fiber products for nongovernmental 
purposes the information with respect to the fiber content of such 
products shall be furnished to the purchaser thereof who shall label 
such products in conformity with the Act and regulations before such 
products are distributed for civilian use.
    (8) All hand woven rugs made by Navajo Indians which have attached 
thereto the ``Certificate of Genuineness'' supplied by the Indian Arts 
and Crafts Board of the United States Department of Interior. The term 
Navajo Indian means any Indian who is listed on the register of the 
Navajo Indian Tribe or is eligible for listing thereon.
    (c) The exclusions provided for in paragraph (b) of this section 
shall not be applicable:
    (1) if any representations as to the fiber content of such products 
are made on any label or in any advertisement without making a full and 
complete fiber content disclosure on such label or in such 
advertisement in accordance with the Act and regulations with the 
exception of those products excluded by paragraph (b)(5) of this 
section; or
    (2) If any false, deceptive, or misleading representations are made 
as to the fiber content of such products.
    (d) The exclusions from the Act provided in paragraph (b) of this 
section are in addition to the exemptions from the Act provided in 
section 12(a) of the Act and shall not affect or limit such exemptions.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2013-10584 Filed 5-17-13; 8:45 am]
BILLING CODE 6750-01-P