[Federal Register Volume 61, Number 65 (Wednesday, April 3, 1996)]
[Proposed Rules]
[Pages 14686-14687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8180]
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FEDERAL TRADE COMMISSION
16 CFR Part 406
Deceptive Advertising and Labeling of Previously Used Lubricating
Oil
AGENCY: Federal Trade Commission.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The Federal Trade Commission (the ``Commission'') proposes to
commence a rulemaking proceeding to repeal its Trade Regulation Rule on
Deceptive Advertising and Labeling of Previously Used Lubricating Oil
(``the Used Oil Rule'' or ``the Rule''), 16 CFR Part 406. The
Commission is soliciting written comments, data, and arguments
concerning this proposal. The Commission also is requesting comments
about the overall costs and benefits of the Rule and its overall
regulatory and economic impact as a part of its systematic review of
all current Commission regulations and guides.
DATES: Written comments must be submitted on or before May 3, 1996.
ADDRESSES: Written comments should be identified as ``16 CFR Part 406
Comment'' and sent to Secretary, Federal Trade Commission, room 159,
Sixth Street and Pennsylvania Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Neil Blickman, Attorney, Federal Trade Commission, Bureau of Consumer
Protection, Division of Enforcement, Washington, DC 20580, (202) 326-
3038.
SUPPLEMENTARY INFORMATION:
Part A--Background Information
This notice is being published pursuant to Section 18 of the
Federal Trade Commission (``FTC'') Act, 15 U.S.C. 57a et seq., the
provisions of Part 1, Subpart B of the Commission's Rules of Practice,
16 CFR 1.7 et seq., and 5 U.S.C. 551 et seq. This authority permits the
Commission to promulgate, modify, and repeal trade regulation rules
that define with specificity acts or practices that are unfair or
deceptive in or affecting commerce within the meaning of Section
5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1).
Based on the Commission's finding that the new or used status of a
lubricant was material to consumers, the Used Oil Rule was promulgated
by the Commission on August 14, 1964 to prevent deception of those who
prefer new and unused lubricating oil. The Rule requires that
advertising, promotional material, and labels for lubricant made from
used oil disclose such previous use. The Rule prohibits any
representation that used lubricating oil is new or unused. In addition,
it prohibits use of the term ``re-refined,'' or any similar term, to
describe previously used lubricating oil unless the physical and
chemical contaminants have been removed by a refining process.
On October 15, 1980, the Used Oil Recycling Act suspended the
provision of the Used Oil Rule requiring labels to disclose the origin
of lubricants made from used oil,\1\ until the Commission issued rules
under the Energy Policy and Conservation Act of 1975 (``EPCA''). The
legislative history indicates congressional concern that the Used Oil
Rule's labeling requirement had an adverse impact on consumer
acceptance of recycled oil, provided no useful information to consumers
concerning the performance of the oil, and inhibited recycling.
Moreover, the origin labeling requirements in the Used Oil Rule may be
inconsistent with the intent of section 383 of EPCA, which is that
``oil should be labeled on the basis of performance characteristics and
fitness for intended use, and not on the basis of the origin of the
oil.'' \2\
\1\ 42 U.S.C. 6363 note.
\2\ See Legislative History Pub. L. 96-463, U.S. Code Cong. and
Adm. News, pp. 4354-4356 (1980).
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Accordingly, on April 8, 1981, the Commission published a notice
announcing the statutory suspension of the origin labeling requirements
of the Used Oil Rule. In the same notice, the Commission suspended
enforcement of those portions of the Used Oil Rule requiring that
advertising and promotional material disclose the origin of lubricants
made from used oil.\3\
\3\ 46 FR 20979.
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The purposes of the recycled oil section of EPCA are to encourage
the recycling of used oil, to promote the use of recycled oil, to
reduce consumption of new oil by promoting increased utilization of
recycled oil, and to reduce environmental hazards and wasteful
practices associated with the disposal of used oil.\4\ To achieve these
goals, section 383 of EPCA directs the National Institute of Standards
and Technology
[[Page 14687]]
(``NIST'') to develop test procedures for the determination of the
substantial equivalency of re-refined or otherwise processed used oil
or blend of oil (consisting of such re-refined or otherwise processed
used oil and new oil or additives) with new oil distributed for a
particular end use and to report such test procedures to the
Commission.\5\ Within 90 days after receiving such report from NIST,
the Commission is required to prescribe, by rule, the substantial
equivalency test procedures, as well as labeling standards applicable
to containers of recycled oil.\6\ EPCA further requires that the
Commission's rule permit any container of processed used oil to bear a
label indicating any particular end use, such as for use as engine
lubricating oil, so long as a determination of ``substantial
equivalency'' with new oil has been made in accordance with the test
procedures prescribed by the Commission.\7\
\4\ 42 U.S.C. 6363(a).
\5\ 42 U.S.C. 6363(c).
\6\ 42 U.S.C. 6363(d)
\7\ 42 U.S.C. 6363(d) (1) (B).
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On July 27, 1995, NIST reported to the Commission test procedures
for determining the substantial equivalency of re-refined or otherwise
processed used engine oils with new engine oils. To implement EPCA's
statutory directive, therefore, the Commission issued, and thereafter
published on October 31, 1995, a rule (covering recycled engine oil)
entitled Test Procedures and Labeling Standards for Recycled Oil
(``Recycled Oil Rule''), 16 CFR Part 311.\8\ The Recycled Oil Rule
adopts the test procedures developed by NIST, and allows (although it
does not require) a manufacturer to represent on a recycled engine-oil
container label that the oil is substantially equivalent to new engine
oil, as long as the determination of equivalency is based on the NIST
test procedures.
\8\ 60 FR 55414 (Oct. 31, 1995).
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The EPCA further provides that once the Recycled Oil Rule becomes
final, no Commission order or rule, and no law, regulation, or order of
any State (or political subdivision thereof), may remain in effect if
it has labeling requirements with respect to the comparative
characteristics of recycled oil with new oil that are not identical to
the labels permitted by this rule.\9\ Also, no rule or order of the
Commission may require any container of recycled oil to also bear a
label containing any term, phrase, or description connoting less than
substantial equivalency of such recycled oil with new oil.\10\
\9\ 42 U.S.C. 6363(e)(1).
\10\ 42 U.S.C. 6363(e)(2).
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Under EPCA, the Recycled Oil Rule preempts the Used Oil Rule's
labeling and advertising requirements for engine oils. For non-engine
oils, the Used Oil Rule's labeling disclosure provisions continue to be
subject to the Congressional stay, and the advertising disclosure
provisions continue to be subject to the Commission's stay. The only
part of the Used Oil Rule not affected by the stays is that section
which prohibits the deceptive use of the term ``re-refined.'' When the
Commission published the Recycled Oil Rule in October 1995, it also
stated that as part of its regulatory review process, it would consider
the continuing need for the Used Oil Rule.\11\
\11\ 60 FR 55414, 55417.
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Part B--Objectives
Based on the foregoing, the Commission has tentatively determined
that to eliminate unnecessary duplication, and any inconsistency with
EPCA's goals, a separate Used Oil Rule is no longer necessary.\12\ The
objective of this notice is to solicit comment on whether the
Commission should initiate a rulemaking proceeding to repeal the Used
Oil Rule.
\12\ Repealing the used Oil Rule would eliminate the
Commission's ability to obtain civil penalties for any future
misrepresentations of the re-refined quality of oil. However, the
Commission has tentatively determined that repealing the Rule would
not seriously jeopardize the Commission's ability to act
effectively. The Recycled Oil Rule defines re-refined oil to mean
used oil from which physical and chemical contaminants acquired
through use have been removed. Any significant problems that might
arise could be addressed on a case-by-case basis, administratively
under Section 5 of the FTC Act, 15 U.S.C. 45, or through Section
13(b) actions, 15 U.S.C. 53(b), filed in federal district court.
Prosecuting serious misrepresentations in district court allows the
Commission to obtain injunctive relief as well as equitable
remedies, such as redress or disgorgement.
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Part C--Alternative Actions
The Commission is not considering any alternative other than the
possibility of repealing the Used Oil Rule.
Part D--Request for Comments
Members of the public are invited to comment on any issues or
concerns they believe are relevant or appropriate to the Commission's
review of the Used Oil Rule. The Commission requests that factual data
upon which the comments are based be submitted with the comments. In
this section, the Commission identifies the issues on which it solicits
public comments. The identification of issues is designed to assist the
public and should not be construed as a limitation on the issues on
which public comment may be submitted.
Questions
(1) Is there a continuing need for the Rule?
(a) What benefits has the Rule provided to purchasers of the
products affected by the Rule?
(b) Has the Rule imposed costs on purchasers?
(2) What changes, if any, should be made to the Rule to increase
the benefits of the Rule to purchasers?
(a) How would these changes affect the costs the Rule imposes on
firms subject to its requirements?
(3) What significant burdens or costs, including costs of
compliance, has the Rule imposed on firms subject to its requirements?
(a) Has the Rule provided benefits to such firms?
(4) What changes, if any, should be made to the Rule to reduce the
burdens or costs imposed on firms subject to its requirements?
(a) How would these changes affect the benefits provided by the
Rule?
(5) Does the Rule overlap or conflict with other federal, state, or
local laws or regulations?
(6) Since the Rule was issued, what effects, if any, have changes
in relevant technology or economic conditions had on the Rule?
(7) Is misrepresentation of the re-refined quality of used
lubricating oil by manufacturers and distributors of such oil a
significant problem in the marketplace?
(8) Should the Rule, or any portion of it, be kept in effect, or
should it be repealed?
(9) How would repealing the Rule affect the benefits experienced by
consumers?
(10) How would repealing the Rule affect the benefits and burdens
experienced by firms subject to the Rule's requirements?
(11) Is the Recycled Oil Rule likely to provide all or most of the
benefits now provided by the Used Oil Rule?
Authority: Section 18(d)(2)(B) of the Federal Trade Commission
Act, 15 U.S.C. 57a(d)(2)(B).
List of Subjects in 16 CFR Part 406
Advertising, Labeling, Trade practices, Used lubricating oil.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-8180 Filed 4-2-96; 8:45 am]
BILLING CODE 6750-01-M
