[Federal Register Volume 61, Number 248 (Tuesday, December 24, 1996)]
[Proposed Rules]
[Pages 67748-67752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32261]
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FEDERAL TRADE COMMISSION
16 CFR Part 301
Rules and Regulations Under the Fur Products Labeling Act
AGENCY: Federal Trade Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Trade Commission (Commission or FTC) has completed
its regulatory review of the Rules and Regulations under the Fur
Products Labeling Act (Fur Rules). Pursuant to that review, the
Commission concludes that the Rules continue to be valuable to both
consumers and firms. The regulatory review comments suggested various
substantive amendments to the Rules. The Commission has considered
these proposals and other proposals that it believes merit further
inquiry. The Commission seeks comment on whether it should amend the
Fur Rules to: Allow for a system of shared information for
manufacturer, importer, or other marketer identification among the
North American Free Trade Agreement (NAFTA) countries; amend Fur Rule
26 (Sec. 301.26) to specify that a Commission registered identification
number (RN) will be subject to cancellation if, after a change in the
material information contained in the RN application, a new application
that reflects current business information is not promptly submitted;
and raise from $20 to $85 or more the cost figure for fur trim and
other products exempted from the requirements of the Fur Rules.
DATES: Written comments will be accepted until January 22, 1997.
ADDRESSES: Comments should be submitted to: Office of the Secretary,
Federal Trade Commission, Room H-159, Sixth Street and Pennsylvania
Avenue, NW., Washington, DC 20580. Submissions should be marked ``Rules
and Regulations under the Fur Act, 16 CFR Part 301--Comment.'' If
possible, submit comments both in writing and on a personal computer
diskette in Word Perfect or other word processing format (to assist in
processing, please identify the format and version used). Written
comments should be submitted, when feasible and not burdensome, in five
copies.
FOR FURTHER INFORMATION CONTACT: Bret S. Smart, Program Advisor, Los
Angeles Regional Office, Federal Trade Commission, 11000 Wilshire
Blvd.,
[[Page 67749]]
Suite 13209, Los Angeles, CA 90024, (310) 235-4040.
SUPPLEMENTARY INFORMATION:
I. Background Information
The Fur Products Labeling Act (Fur Act), 15 U.S.C. 69, requires
marketers of covered fur products to mark each product to show (1) the
name(s) of the animal(s) that produced the fur(s); (2) that the fur
product contains or is composed of used fur, when such is the fact; (3)
that the fur product contains or is composed of bleached, dyed, or
otherwise artificially colored fur, when such is the fact; (4) that the
fur product is composed in whole or in substantial part of paws, tails,
bellies, or waste fur, when such is the fact; (5) the name under which
the manufacturer or other responsible company does business, or in lieu
thereof, the RN issued to the company by the Commission; and (6) the
name of the country of origin of any imported furs used in the fur
product. The Fur Act also contains advertising and recordkeeping
provisions. Pursuant to Section 8(b) of the Fur Act, 15 U.S.C. 69f(b),
``[t]he Commission is authorized and directed to prescribe rules and
regulations governing the manner and form of disclosing information
required by this Act, and such further rules and regulations as may be
necessary and proper for purposes of administration and enforcement of
this Act.'' The Commission has issued implementing regulations, the Fur
Rules, which are set forth at 16 CFR part 301.
As part of the Commission's on-going regulatory review of all its
rules, regulations, and guides, on May 6, 1994, the Commission
published a Federal Register notice (FRN), 59 FR 23645, seeking public
comment on the Fur Rules. The FRN solicited comments about the overall
costs and benefits of the Fur Rules and their regulatory and economic
impact. The FRN also sought comment on what changes in the Fur Rules
would increase the benefits of the Fur Rules to purchasers and how
those changes would affect the costs the Rules impose on firms subject
to their requirements. The Commission further stated that Sections 19
and 27 would be amended to comply with ``metrication'' mandates if the
Commission decided to retain those rules in their current form after
the regulatory review. Finally, the FRN stated that, should Section 43
be retained, certain language therein would be modified to conform with
that set forth in Cliffdale Associates, Inc., 103 F.T.C. 110, 164-65
(1984) and subsequent cases.1 The deadline for submission of
comments was extended twice, on July 7, 1994 and September 12, 1994.
The final deadline for comments was October 15, 1994.
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\1\ The regulatory review comments are silent as to the proposed
``metrication'' changes to Sections 19 and 27, and the addition of
the language from the Cliffdale Associates, Inc. matter to Section
43, and the Commission does not propose any substantive changes to
these Sections. The Commission has decided to retain these Sections
in their present form. Therefore, in a separate notice, the
Commission announces the final amendments to Sections 19 and 27 to
include metric equivalents beside the inch/pound unit measurements
in those Sections, as required by Executive Order 12770 of July 25,
1991 (56 FR 35801, July 29, 1991) and the Metric Conversion Act, as
amended by the Omnibus Trade and Competitiveness Act (15 U.S.C.
205b). The same notice states that Section 43 will be amended to
reflect language consistent with that set forth in Cliffdale
Associates, Inc., 103 F.T.C. 110, 164-65 (1984) and subsequent
cases.
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II. Regulatory Review Questions and Comments
The Commission received seven comments in response to the
FRN.2 Five comments expressed general support for retaining the
collective Textile Rules (16 CFR 303), Wool Rules (16 CFR 300) and Fur
Rules.3 One comment from a trade association of companies covered
by the Fur Rules' marking requirements stated: ``we feel that it would
be in the best interest of the fur industry to remain under the present
rules.'' 4
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\2\ Dan River Inc. [DR] (1), People for the Ethical Treatment of
Animals [PETA] (2), Fieldcrest Cannon, Inc. [FIELD] (3), American
Textile Manufacturers Institute [AMTI] (4), Fruit of the Loom
[FRUIT] (5), Seattle Fur Exchange [SFE] (6), and Milliken & Company
[MILL] (7). The number in parentheses denotes the number assigned by
the Office of the Secretary to the comment in the public record of
comments received in the regulatory review of the Fur Rules.
\3\ DR (1), FIELD (3), ATMI (4), FRUIT (5), and MILL (7). The
regulatory reviews of the Textile Rules, the Wool Rules, and the Fur
Rules were undertaken simultaneously. In each case, these five Fur
Rules comments are identical copies of submissions that were made
under both the Textile Rules and the Wool Rules. The comments are
primarily responsive to Textile Rules and Wool Rules issues and only
minimally relevant to Fur Rules issues. Nevertheless, the five
comments express general support for all three of the Commission's
implementing Rules.
\4\ SFE (6) p.1.
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The comments submitted in response to the regulatory review of the
Fur Rules propose certain amendments. Based on the comments and other
available information, the Commission has considered proposals to amend
the Rules to: (a) Require additional disclosures and record keeping
relating to the number of furs used in a fur product and the manner in
which animals producing the furs died; (b) allow for a system of shared
information for manufacturer, importer, or other responsible company
identification among the NAFTA countries; (c) add a provision to
Section 26 specifying that a Commission RN will be subject to
cancellation if, after a change in the material information contained
in the RN application, a new application that reflects current business
information is not promptly submitted; and (d) raise from $20 to $85 or
more the cost figure for fur trim and other products exempted from the
requirements of the Fur Rules.
Although no comments were received from consumers or consumer
groups, the Commission believes that consumers benefit directly from
the Fur Rules and consider the mandated disclosures material in making
purchase decisions. Companies at all levels of manufacture,
distribution, and sales of fur products support and accept these
regulations. Thus, the Commission has determined that it will retain
the Fur Rules. However, the Commission has decided to seek additional
comment on possible amendments to the Rules.
After reviewing specific recommendations, the Commission is
considering some of the suggested changes, as well as other possible
amendments. The Commission has, however, rejected other changes to the
Fur Rules proposed in the comments as infeasible or unnecessary. This
Notice of Proposed Rulemaking (NPR) seeks comment concerning several
proposed changes to the Fur Rules. All of the recommendations for
change are discussed below.
III. Proposals for Amendments to the Fur Rules
This section discusses specific recommendations and proposed
changes received in response to the Commission's solicitation of
comment in the FRN and additional issues raised by the comments or the
Commission. The discussion includes a summary and analysis of the
comments and explanation of the changes proposed by the Commission.
A. Disclose the Number of Furs Used in a Fur Product and the Manner in
Which Animals Producing the Furs Died
One commenter 5 recommended that the Fur Rules be amended by
requiring covered companies to provide additional disclosures and keep
additional records relating to the number of animals used in a fur
product and the manner in which the animals producing the furs died.
The Commission does not propose to amend the Fur Rules in this manner,
as such proposed regulations do not relate to the ``manner and form of
disclosing information required by [the Fur] Act,'' nor are they
``necessary and proper for
[[Page 67750]]
purposes of administration and enforcement of [the Fur] Act'' within
the meaning of Section 8(b) of the Fur Act.
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5 PETA (1) pp.1-5.
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B. System of Shared Information for Manufacturer or Other Responsible
Company Identification Among the NAFTA Countries
Under the Fur Act, the Wool Products Labeling Act,6 and the
Textile Fiber Products Identification Act,7 the required label on
covered products must bear the identification of one or more companies
responsible for the manufacture, importation, offering for sale, or
other handling of the product, either by the full name under which the
company does business or, in lieu thereof, by the RN issued by the
Commission.8 Canada has a similar system of identification numbers
known as CA numbers. Mexico does not have a similar system, but the
Mexican government issues tax identification numbers to companies.
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\6\ 15 U.S.C. 68.
\7\ 15 U.S.C. 70.
\8\ Section 4(2)(E) of the Fur Act, 15 U.S.C. 69b(2)(E),
requires disclosure of: ``the name, or other identification issued
and registered by the Commission, of one or more of the persons who
manufacture such fur product for introduction into commerce,
introduce it into commerce, sell it in commerce, advertise or offer
it for sale in commerce, or transport or distribute it in
commerce.''
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To eliminate the need for a company to register in more than one
country, the comments received recommend that the FTC and appropriate
government agencies in the NAFTA countries develop an integrated system
by allowing any RN, CA, or Mexican tax identification number to suffice
as legal company identification in all three NAFTA countries.9 The
comments state that it would not be necessary to create one
identification number system. They recommend that each NAFTA country
continue its policy and procedure of registration, with the U.S.
continuing the present system of RN numbers. The countries could then
exchange information on computer databases so that a covered product
can be traced to a manufacturer or other responsible party using either
an RN number, a CA number, or a Mexican tax number. Such a system would
facilitate use of a single label for fur goods shipped to NAFTA
countries.
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\9\ DR (1) p.1., FIELD (3) pp.2-3, ATMI (4) p.2, FRUIT (5) p.5,
MILL (7) p.3. Moreover, numerous comments of this nature are
contained in the responses received in the regulatory reviews of the
Textile Rules and the Wool Rules. Although the focus of the Fur Act
is significantly different from that of the Textile Act and the Wool
Act, all three contain provisions relating to establishment of the
RN system. Both the Textile Rules and the Wool Rules contain
parallel provisions to Fur Rule 26(c), which states that:
Registered identification numbers assigned under this rule may
be used on labels required in labeling products subject to the
provisions of the Wool Products Labeling Act and the Textile Fiber
Products Identification Act, and numbers previously assigned or to
be assigned by the Commission under such Acts may be used as and for
the required name in labeling under this Act. When so used by the
person or firm to whom assigned, the use of the numbers shall be
construed as identifying and binding the applicant as fully and in
all respects as though assigned under the specific Act for which it
is used.
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Congress would have to amend the Fur Act to allow CA numbers and
Mexican tax numbers, which are not registered by the Commission, to be
used on fur products shipped for distribution in the United States. For
present purposes, the Commission seeks comment on the advantages and
disadvantages of a system of shared information, the feasibility of
implementing such a system across borders, and the impact such a system
might have on the ability of the Commission, consumers, and firms to
track responsible parties. Alternatively, the Commission might consider
whether simply to permit the use of the identification numbers of a
NAFTA trading partner, provided that the partner made the identifying
information readily available to anyone seeking it. The Commission
seeks comment on the advantages and disadvantages of this alternative,
which also would require statutory amendment.
C. Require Holders of RN Numbers To Update Their Registration
Information When Changes in That Information Occur
The success of a system of shared information among NAFTA countries
depends to a great extent on the availability and the quality of the
information in the Commission's RN registry and the registration
systems of Canada and Mexico. To increase the usefulness of the RN
registry, the Commission plans to improve its accuracy and the ease of
access to its contents.
Since initially being issued RNs, many companies have changed their
legal business name, business address, and/or company type (e.g., from
proprietorship to corporation) without notifying the FTC about the
change(s), as required by Section 26(b)(2) and as requested on the RN
application form currently used by the Commission for RN requests
relating to either the Textile, Wool or Fur Rules. Additionally, many
RN holders have gone out of existence, and others, while still in
existence, no longer have any need for their RNs. As a result, a large
percentage of the official FTC records do not reflect an actual user's
current name, place of business, and/or company type.
Registered identification numbers are subject to cancellation
whenever any such number was procured or has been used improperly or
contrary to the requirements of the Fur Act and Regulations, or when
otherwise deemed necessary in the public interest. The Commission
proposes to add a provision to the Fur Rules that would subject an RN
number to cancellation if, after a change in the material information
contained in the RN application, a new application is not promptly
submitted to the Commission. Section 301.26(b)(2) of the Rules already
requires that changes in name, business address, or legal business
status of RN holders be reported promptly to the Commission. The
proposed amendment is merely an added provision to enable the
Commission to update its database.10 The Commission plans to
undertake a program to update the RN database, in stages over a period
of time. Commission staff will make every reasonable effort to identify
and locate all companies actually using an RN and make them aware of
their obligations to update their applications before a specified
deadline. Numbers assigned to companies that are no longer in business,
or that cannot be located, would then be subject to revocation.
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\10\ It also complements the Commission's Rules of Practice,
which state: ``Numbers are subject to revocation for cause or upon a
change in business status or discontinuance of business.'' 16 CFR
1.32.
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The Commission seeks comment on the proposal to revise Section
26(b)(2) to read as follows:
Sec. 301.26 Registered Identification Number.
(a) * * *
(b)(1) * * *
(2) Registered identification numbers will be subject to
cancellation if the Federal Trade Commission fails to receive prompt
notification of any change in name, business address, or legal
business status of a person or concern to whom a registered
identification number has been assigned by application duly executed
in the form set out in subsection (d) of this section, reflecting
the current name, business address, and legal business status of the
person or concern.
* * * * *
D. Increase the Cost Figure Below Which Fur Items Will Be Exempt From
the Requirements of the Fur Rules
Under Section 39 of the Fur Rules, fur trim or other fur items for
which the cost to the manufacturer, or the manufacturer's selling
price, does not exceed $20 are exempt from some of the requirements of
the Fur Act and Rules. This amount was last adjusted for
[[Page 67751]]
inflation in 1969. Adjusting it for inflation that has occurred since
1969 would raise the amount to $85. The Commission seeks comment on
whether $85 is an appropriate amount for the exemption, or whether it
should be a higher figure such as $100.
IV. Invitation to Comment and Questions for Comment
A. Invitation
Members of the public are invited to comment on any issues or
concerns they believe are relevant or appropriate to the Commission's
consideration of the proposed amendment to the Fur Rules. The
Commission requests that factual data upon which the comments are based
be submitted with the comments. In addition to the issues raised above,
the Commission solicits public comment on 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.
B. Questions
Identification Numbers of Manufacturers or Other Responsible Parties
1. If it were consistent with the Fur Act to do so, should the
Commission amend the Fur Rules to allow the interchangeable use of RN,
CA, or Mexican tax numbers?
a. What would be the advantages and disadvantages of a system of
shared information? Alternatively, what would be the advantages and
disadvantages of a system whereby one NAFTA country recognized and
allowed the identification numbers of another NAFTA country, provided
that the information would be made easily accessible to those seeking
it?
b. Would the implementation of a system of shared information
across national borders be feasible?
c. What impact would a system of shared information have on the
ability of consumers and businesses to track responsible parties?
d. What benefits and costs to consumers and businesses would result
from such an amendment? Would such an amendment have a significant
economic impact on a substantial number of small business entities?
Explain the nature and amount of such impact.
2. Is the proposed amendment to Fur Rule 26(b)--enabling the
Commission to cancel an RN where the information contained on the
original application is not properly updated--reasonable and
appropriate? Are there other alternatives that would enable the
Commission to maintain an accurate data base?
Dollar Amount for Exemption for Fur Trim
3. Should the Commission raise the cost figure for exemption from
some of the requirements of the Fur Rules from $20 to $85? Should the
amount be raised higher to account for some future inflation between
1996 and the time the Fur Rules are again subject to regulatory review?
Would $100 be an appropriate amount for this exemption?
V. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-12, requires
that the agency conduct an analysis of the anticipated impact of the
proposed amendments on small businesses.11 The purpose of a
regulatory flexibility analysis is to ensure that the agency considers
impact on small entities and examines regulatory alternatives that
could achieve the regulatory purpose while minimizing burdens on small
entities. However, Section 605 of the RFA, 5 U.S.C. 605, 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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\11\ The RFA addresses the impact of rules on ``small
entities,'' defined as ``small businesses,'' ``small governmental
entities,'' and ``small [not-for-profit] organizations,'' 5 U.S.C.
601. The Fur Rules do not apply to the latter two types of entities.
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Because the Fur Act, and the Fur Rules issued thereunder, cover the
manufacture, sale, offering for sale, advertising, and distribution of
fur products, the Commission believes that any amendments to the Fur
Rules may affect a substantial number of small businesses. Unpublished
data prepared by the U.S. Census Bureau under contract to the Small
Business Administration (SBA) show that there are some 181
establishments manufacturing fur goods (SIC code 2371), all of which
qualify as small businesses under applicable SBA size standards.12
Other small businesses are likely involved in the distribution and sale
of products subject to the Fur Rules.
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\12\ SBA's revised small business size standards are published
at 61 FR 3280 (January 31, 1996).
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However, the proposed amendments apparently would not have a
significant economic impact upon such entities. Comments received
during the regulatory review of the Fur Rules indicated that the costs
of complying with the Rules and the Fur Act are not substantial. The
proposed amendments should clarify existing requirements of the Fur
Rules and reduce further the costs of compliance with Fur Act
requirements.
The Commission proposes to amend Section 26 of the Fur Rules--
governing the issuance of an RN number--to clarify that such numbers
are subject to cancellation if changes in the information provided in
the original application for the number are not reported to the
Commission as required by Section 26(b)(2). This amendment does not
impose any new requirement upon businesses. Furthermore, while
Commission cancellation of an identification number would require a
business to re-apply, this may be done simply by submitting the
identifying information already called for in the Rules. Therefore,
amending the Rules as proposed will not impose any significant economic
costs on members of the industry.
The proposed amendment raising the cost figure for fur trim that is
exempted from some of the provisions of the Fur Rules likewise does not
impose any new requirement on businesses. In fact, it is an
inflationary adjustment that will slightly reduce compliance burdens
and costs. The change, while likely important to some firms, is not
expected to have a significant impact on the fur industry.
On the basis of available information, the Commission certifies
that amending the Fur Rules as proposed will not have a significant
economic impact on a substantial number of small businesses. To ensure
that no significant economic impact is being overlooked, however, the
Commission requests comments on this issue. The Commission also seeks
comments on possible alternatives to the proposed amendments to
accomplish the stated objectives within the statutory framework. After
reviewing any comments received, the Commission will determine whether
a final regulatory flexibility analysis is appropriate.
VI. Paperwork Reduction Act
The Fur Rules contain various information collection requirements
for which the Commission has obtained clearance under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et. seq., Office of Management and
Budget (OMB) Control Number 3084-0099. These requirements relate to the
accurate disclosure of material information about fur content and
products, and requirements for manufacturers and dealers to retain
records to support claims made on labels and advertisements. Most of
these requirements are specifically mandated by the Fur Act. See e.g.,
15 U.S.C. 69b, 69e. The Commission has also obtained
[[Page 67752]]
OMB clearance for petitions for an exemption under the Fur Act, even
though it has received no such petitions over the past decade. A Notice
soliciting public comments on extending these clearances through
December 31, 1999, was recently published in the Federal Register. 61
FR 43764 (August 26, 1996).
The Commission's current proposal regarding cancellation of RN
numbers, discussed in detail above, would not impose an additional
``burden'' on current and/or future holders of Registered
Identification Numbers. This is because the Fur Rules at 16 CFR
301.26(b)(2) already require companies to notify the FTC about changes
in business names, addresses, company type, etc. The current proposal
merely adds the element of cancellation by the Commission if these
requirements are not met. Neither the initial filing procedures nor the
requirement to update the information are new and therefore, no
additional ``burden'' is imposed.
More importantly, the underlying certification itself does not meet
the definition of ``information'' contained in the PRA. In implementing
the Paperwork Reduction Act of 1995, OMB attempted to clarify the
exemption for ``certifications'' in Section 1320.3(h) (1)-(10) in both
the Notice of Proposed Rulemaking, 60 FR 30438, 30439 (June 8, 1995)
and the Final Rule, 61 FR 44978, 44979 (August 9, 1995) (``the
exemption applies when the certification is used to identify an
individual in a 'routine, non-intrusive, non-burdensome way.' '') This
language reflects current guidance in OMB/OIRA's Information Collection
Review Handbook (1989), which discusses exempt categories of inquiry (5
CFR 1320.3(h) (1)-(10)) that are not deemed to constitute
``information.'' Certifications, as well as other forms of
acknowledgments, comprise one of these categories.13 Such
inquiries are considered to be routine because response to the requests
rarely requires examination of records, usually does not require
consideration about the correct answer, and usually is provided on a
form supplied by the government. See OMB/OIRA Handbook, p. 29.
Accordingly, OMB's regulations exempt certifications from the clearance
requirement, provided that no information need be reported beyond
certain basic identifying information.
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\13\ Specifically, the first category consists of: ``affidavits,
oaths, affirmations, certifications, receipts, changes of address,
consents, or acknowledgments.'' 5 CFR 1320(h)(1).
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VII. Additional Information for Interested Persons
A. Motions or Petitions
Any motions or petitions in connection with this proceeding must be
filed with the Secretary of the Commission.
B. Communications by Outside Parties to Commissioners or their Advisors
Pursuant to Sec. 1.18(c) of the Commission Rules of Practice, 16
CFR 1.18(c), communications with respect to the merits of this
proceeding from any outside party to any Commissioner or Commissioner's
advisor during the course of this rulemaking shall be subject to the
following treatment. Written communications, including written
communications from members of Congress, shall be forwarded promptly to
the Secretary for placement on the public record. Oral communications,
not including oral communications from members of Congress, are
permitted only when such oral communications are transcribed verbatim
or summarized at the discretion of the Commissioner or Commissioner's
advisor to whom such oral communications are made, and are promptly
placed on the public record, together with any written communications
relating to such oral communications. Memoranda prepared by a
Commissioner or Commissioner's advisor setting forth the contents of
any oral communications from members of Congress shall be placed
promptly on the public record. If the communication with a member of
Congress is transcribed verbatim or summarized, the transcript or
summary will be placed promptly on the public record.
List of Subjects in 16 CFR Part 301
Furs Labeling, Trade practices.
Authority: 15 U.S.C. 69.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-32261 Filed 12-23-96; 8:45 am]
BILLING CODE 6750-01-P
