[Federal Register Volume 61, Number 126 (Friday, June 28, 1996)]
[Rules and Regulations]
[Pages 33651-33654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16476]
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FEDERAL TRADE COMMISSION
16 CFR Part 305
Rule Concerning Disclosures Regarding Energy Consumption and
Water use of Certain Home Appliances and Other Products Required Under
the Energy Policy and Conservation Act (``Appliance Labeling Rule'')
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (``Commission'') issues final
amendments to the Appliance Labeling Rule (``the Rule'') to permit the
placement of energy use labels required by the Canadian and Mexican
governments in a location ``directly adjoining'' the Rule's required
``EnergyGuide'' label. Previously the Rule prohibited the affixation of
non-required information ``on or directly adjoining'' the EnergyGuide.
The relaxation of this prohibition will further the goal of the North
American Free Trade Agreement (``NAFTA'') to make compatible the
standards-related measures of the signatories to facilitate trade in a
good or service among the parties. Moreover, the amendment will result
in considerable savings for the appliance manufacturing industry.
EFFECTIVE DATE: June 28, 1996.
FOR FURTHER INFORMATION CONTACT: James G. Mills, Attorney, Division of
Enforcement, Federal Trade Commission, Washington, D.C. 20580 (202-326-
3035).
SUPPLEMENTARY INFORMATION:
I. Background
A. The Request by Whirlpool
In July, 1995, the Whirlpool Corporation (``Whirlpool'') requested
permission to use hang tag EnergyGuide labels that have the
corresponding Canadian ``EnerGuide'' appliance energy use label printed
on the reverse side, and/or permission to use a single stick-on or hang
tag label consisting of the Commission's EnergyGuide immediately next
to (or above) the appropriately corresponding Canadian EnerGuide.
Whirlpool also asked for permission to label in the same manner using
the appliance energy use label required by Mexico, or using all three
labels.
In support of its request, Whirlpool stated that the continued
existence of separate appliance labeling requirements among the United
States, Canada, and Mexico represents an obstacle to free trade among
the signatories to NAFTA. Whirlpool contended that the ability to print
the labels required by the three countries next to each other on a
single piece of label stock would mitigate the impact of that obstacle.
Whirlpool also stated that using such labels would save Whirlpool
significant resources--by reducing the number of separate U.S. and
Canadian models of appliances that Whirlpool produces and by reducing
labeling expenses.
B. Applicable Sections of the Appliance Labeling Rule
Section 305.11(a)(5)(i)(K) of the Rule, 16 CFR 305.11(a)(5)(i)(K),
states that: No marks or information other than that specified in this
Part shall appear on or directly adjoining [the EnergyGuide] label
except for a part or publication number identification, as desired by
the manufacturer. * * * [emphasis added]
The language in this section pertains to labels for refrigerators,
refrigerator-freezers, freezers, dishwashers, clothes washers, water
heaters, and room air conditioners. Identical language appears in two
other sections relating to labels for furnaces and pool heaters (16 CFR
305.11(a)(5)(ii)(I)) and central air conditioners (16 CFR
305.11(a)(5)(iii)(H)(1)). The purpose of this prohibition was to avoid
having other information detract from the Energy Guide label.
C. The Notice of Proposed Rulemaking
The Commission agreed that permitting manufacturers to use side-by-
side or back-to-back labeling that included the energy use labels of
the three NAFTA signatories could further the goals of NAFTA and could
reduce the cost of compliance with the Rule. The Commission, therefore,
on February 22, 1996, issued a Notice of Proposed Rulemaking (``NPR'')
proposing amendments to the above-referenced sections of the Rule.\1\
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\1\ 61 FR 6801.
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In the NPR, the Commission addressed whether permitting this type
of labeling would result in consumer confusion. The Commission reasoned
that, because the EnergyGuide is the only one of the three labels that
is exclusively in English, and because there are two disclosures on it
stating that the information is derived from U.S. government tests and
utility costs, U.S. consumers may realize that only one label is
pertinent to them. Further, the United States and Canada, and, to a
slightly lesser extent, Mexico, use compatible test procedures for
identifying energy use, and require information to be reported in terms
of kilowatt-hour use per year. Thus, the Commission concluded
preliminarily that the similarity of the information being disclosed on
each country's label may make the possibility of confusion less likely.
Moreover, U.S. consumers are already seeing Canadian labels on some
appliances (especially in the northern states), and possibly Mexican
labels, although not directly adjoining the EnergyGuide. Finally, the
Commission pointed out that, on many
[[Page 33652]]
packages, instruction manuals, and labels that accompany products
destined for multiple countries, consumers are presented with
information in more than one language. Thus, the Commission tentatively
determined that consumers are not likely to be confused or misled by
the presence of multiple appliance energy use labels, as long as they
can clearly distinguish which is intended for the U.S. audience.
The Commission noted in the NPR that it has worked closely with
representatives of the Canadian EnerGuide program over the past two
years to explore regulatory harmonization under NAFTA. This work has
centered around each country's recent review of its respective
appliance labeling rule, with both considering each other's research
and proposed changes. More recently, representatives of the Mexican
government have joined in this dialogue. The Commission stated its
intention to continue this cooperative pursuit of tri-lateral
harmonization to determine whether a single label can be designed that
effectively fulfills the requirements of all three countries, and
characterized the proposed amendments as an interim measure to provide
manufacturers greater labeling flexibility to facilitate trade.
To obtain more information regarding its proposal, the Commission
posed the following questions in the NPR:
1. Would allowing energy use labels required by the Canadian or
Mexican governments to be placed next to the U.S. EnergyGuide be likely
to detract from the effectiveness of the EnergyGuide or cause consumer
confusion?
2. Should the Commission limit the information that the amendments
would permit to be placed ``directly adjoining'' the EnergyGuide only
to energy use disclosures required by the governments of Canada and
Mexico? For example, should the amendments permit additional
information required by the governments of Canada and Mexico, such as
environmental or safety-related information, also to be placed
``directly adjoining'' the EnergyGuide?
3. Should the Commission limit the amendments to apply to energy
use (or other) information required only by the governments of Canada
and Mexico, or should the amendments permit energy use (or other)
information required by the governments of all other nations?
II. Discussion of Comments
The Commission received four comments in response to the NPR.\2\
Three comments were from manufacturers of major household
appliances,\3\ and one was from a trade association representing
manufacturers.\4\ All the comments supported the proposed amendments.
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\2\ The comments are found on the Public Record at the Federal
Trade Commission in Washington, D.C., under Rulemaking Record Number
R611004 (Appliance Labeling Rule). They are numbered B19229500001-
B19229500004. The numerical prefix ``B192295'' identifies the
comments as being in response to the NPR. In this notice, the
comments are cited by an identification of the commentor, the last
two digits of the comment number, and the relevant page number(s),
e.g., ``Whirlpool, 02, 2-3.'' The four comments were from: The
Association of Home Appliance Manufacturers (``AHAM, 01''); The
Whirlpool Corporation (``Whirlpool, 02''); White Consolidated
Industries, Inc. (``White, 03''); and, W.C. Wood Company, Inc.
(``Wood, 04'').
\3\ Wood, 04; Whirlpool, 02; White, 03.
\4\ AHAM, 01.
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A. Amending the Rule To Permit Placement of Canadian and Mexican Energy
Use Labels in Close Proximity to the EnergyGuide
AHAM and Whirlpool agreed with the Commission that the proposed
amendments would promote the intend of NAFTA to facilitate the free
flow of commerce across North American international boundaries.\5\
AHAM, White, and Wood agreed that the proposed amendments would benefit
appliance manufacturers until the Commission's Rule could be harmonized
with the energy use regulations of Canada and Mexico.\6\ These comments
commended the Commission for its continuing efforts at harmonization
and its goal of developing a single energy use label that meets the
requirements of all three NAFTA signatories.\7\
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\5\ AHAM, 01, 2; Whirlpool, 02, 1.
\6\ AHAM, 01, 2; White, 03, 1; Wood, 04, 2.
\7\ Id.
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AHAM, Whirlpool, and Wood stated that the proposed amendments would
enable manufacturers to comply with the Rule more efficiently and
economically.\8\ Wood explained:
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\6\ AHAM, 01, 1-2; Whirlpool, 02, 1, 3; Wood, 04, 1.
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Allowing the placement of any two or all three of the energy
labels on applicable models side by side, above and below or on a
single label or hang tag will allow our company to reduce the number
of [stock-keeping units) required to be built and tracked. The
reason for this is that a great many of the appliances going to
Canada and Mexico are identical to that produced for the domestic
market, with the only difference being the energy' label. In order
to build this change on the production line and keep track of the
`energy' label through the warehouse and distribution chain, a
separate and unique model is built.
The appliance industry is a very competitive market and with
NAFTA it is a very competitive North American market. A relaxation
in the current labeling rules will provide our company with real
economic benefits.\9\
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\9\ Wood, 04, 1.
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B. Would the Proposed Amendments Be Likely To Result in Consumer
Confusion or Detraction From the EnergyGuide?
The comments unanimously concluded that placement of Canadian and/
or Mexican energy use labels next to the EnergyGuide would not detract
from the Commission's label and would not confuse consumers.\10\
Whirlpool's reasoning was representative of all the comments:
\10\ AHAM, 01, 3, 4; Whirlpool, 02, 2; White, 03, 1; Wood, 04,
2.
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The primary energy descriptors are identical for all three
nations and the U.S. label is the only one written entirely in
English. Also, the FTC label notes that energy consumption estimates
are based on U.S. government standard tests. Furthermore, we submit
that consumers are becoming more and more sophisticated in quickly
identifying the differences in instructional and point of purchase
labels since an increasing number of such materials are being
written in multilingual script to accommodate world marketing
trends.\11\
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\11\ Whirlpool, 02, 2.
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C. Should the Proposed Amendments Be Limited To Apply Only to Energy
Use Labels? Should the Proposed Amendments Be Limited To Apply Only to
Information Required by the Canadian and Mexican Governments?
All four comments agreed that the proposed amendments should apply
only to energy use disclosure labels.\12\ They reasoned that too many
unrelated labels next to the EnergyGuide would detract from its message
and cause information overload and confusion. As suggested by White,
other information may be more appropriate communicated in care and use
manuals:
\12\ AHAM, 01, 3-4; Whirlpool, 02, 1-2; White, 03, 1; Wood, 04,
2.
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[We] urge that the content remain energy information only,
consistent with the familiar Energy Guide. Diverse information
detracts from the important energy information and the industry
guards against the appliance becoming a ``billboard.'' Literature
included with the appliance and intended as a continuous guide for
safe use and maintenance is more appropriate for including other
information.\13\
\13\ White, 03, 1.
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Moreover, as AHAM pointed out, some safety and environmental
disclosures are voluntary in some of the
[[Page 33653]]
countries, and mandatory in others, while energy use information is
required by law in all three.\14\
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\14\ AHAM, 01, 4.
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Whirlpool suggested that the proposed amendments be expanded to
apply to the energy use labels required by countries in Europe, Latin
America, and Asia, in addition to Canada and Mexico, even though total
harmonization of labels of all the countries in these areas may be
decades away. In support of this proposal, Whirlpool stated that the
Commission should take the lead in permitting multinational labeling to
avoid future conflicts as the appliance industry markets its produces
worldwide. Whirlpool provided regulatory language with its comment that
would accomplish this end.\15\
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\15\ Whirlpool, 02, 2.
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AHAM, advocated a more conservative approach, stating:
There will likely come a time when a common international
``energy use disclosure'' is appropriate and desired, as U.S.
product exports increase to countries throughout the world. However,
at this time, AHAM does not recommend other countries' information
be permitted in conjunction with the EnergyGuide label.\16\
\16\ AHAM, 01, 4.
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The Commission agrees with AHAM in this regard. While there may be
sufficient similarity between the Commission's Rule and the labeling
requirements of other nations at some future time to justify including
them in this section of the Rule, the present record does not contain
evidence to justify an expansion of the proposed amendments as
Whirlpool has suggested.
III. Conclusion
The record contains unanimous support for the proposed amendments.
Moreover, with the exception of Whirlpool's suggestion to allow the
placement of the energy use labels of other countries, in addition to
those of Canada and Mexico, ``on or directly adjoining'' the
EnergyGuide, the record also supports the form and language of the
proposed amendments as they appear in the NPR. The Commission,
therefore, amends the Appliance Labeling Rule as proposed in the NPR.
Manufacturers are still prohibited from placing other information on or
directly adjoining the EnergyGuide.
Section A--Regulatory Flexibility Act
In the NPR, the Commission concluded, on a preliminary basis, that
the provisions of the Regulatory Flexibility Act relating to an initial
Regulatory Flexibility Act analysis (5 U.S.C. 603-604) were not
applicable to this proceeding because the amendments, if promulgated,
would not have a ``significant economic impact on a substantial number
of small entities'' (5 U.S.C. 605). The Commission concluded,
therefore, that a regulatory flexibility analysis was not necessary.
To determine whether a final regulatory flexibility analysis would
be necessary, however, in the NPR the Commission requested information
on whether the proposed amendments would have a significant impact on a
substantial number of small entities. No comments were received on this
issue.
In light of the above, and because the amendments do not impose any
new obligations on entities regulated by the Appliance Labeling Rule,
the Commission certifies, under Section 605 of the Regulatory
Flexibility Act (5 U.S.C. 605(b)), that the amendments announced today
will not have a significant impact on a substantial number of small
entities.
Section B--Paperwork Reduction Act
In the NPR, the Commission stated that the amendments would not
expand the Appliance Labeling Rule's existing recordkeeping and
reporting requirements, and that the Commission, therefore, was not
requesting that the Office of Management and Budget adjust the existing
clearance for the Appliance Labeling Rule (OMB No. 3084-0069) under the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.). To substantiate the
accuracy of its reporting burden estimate, however, the Commission
requested comment on the extent of the reporting and recordkeeping
burden associated with the amendments.
The Commission received one comment on this issue. Whirlpool agreed
with the Commission's conclusion that the amendments would not expand
existing recordkeeping and reporting requirements. Whirlpool stated,
``In fact, granting of this proposal would reduce recordkeeping and
reporting among the regulated community.'' \17\
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\17\ Whirlpool,02, 3.
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Accordingly, the Commission reaffirms its prior determination that
the amendments do not alter the Rule's recordkeeping or reporting
requirements and that they do not, therefore, require OMB clearance.
Text of Amendments
For the reasons discussed above, the Commission amends 16 CFR Part
305 to permit (but not require) appliance manufacturers to place the
energy use disclosure labels required by the governments of Canada and
Mexico in a location directly adjoining the Commission's EnergyGuide,
as follows below:
List of Subjects in 16 CFR Part 305
Advertising, Energy conservation, Household appliances, Labeling,
Reporting and recordkeeping requirements.
PART 305--[AMENDED]
1. The authority citation for Part 305 continues to read as
follows:
Authority: 42 U.S.C. 6294.
2. Section 305.11(a)(5)(i)(K), (a)(5)(ii) (I), and
(a)(5)(iii)(H)(1) are revised to read as follows:
Sec. 305.11 Labeling for covered products.
(a) * * *
(5) * * *
(i) * * *
(K) No marks or information other than that specified in this Part
shall appear on or directly adjoining this label, except a part or
publication number identification may be included on this label, as
desired by the manufacturer, and the energy use disclosure labels
required by the governments of Canada or Mexico may appear directly
adjoining this label, as desired by the manufacturer. If a manufacturer
elects to use a part or publication number, it must appear in the lower
right-hand corner of the label and be set in 6-point type or smaller.
(ii) * * *
(I) No marks or information other than that specified in this Part
shall appear on or directly adjoining this label, except a part or
publication number identification may be included on this label, as
desired by the manufacturer, and the energy use disclosure labels
required by the governments of Canada or Mexico may appear directly
adjoining this label, as desired by the manufacturer. If a manufacturer
elects to use a part or publication number, it must appear in the lower
right-hand corner of the label and be set in 6-point type or smaller.
* * * * *
(iii) * * *
(H) * * *
(1) No marks or information other than that specified in this Part
shall appear on or directly adjoining this label, except a part or
publication number identification may be included on this label, as
desired by the manufacturer, and the energy use disclosure labels
required by the governments of Canada or Mexico may appear directly
adjoining this label, as
[[Page 33654]]
desired by the manufacturer. If a manufacturer elects to use a part or
publication number, it must appear in the lower right-hand corner of
the label and be set in 6-point type or smaller.
* * * * *
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 96-16476 Filed 6-27-96; 8:45 am]
BILLING CODE 6750-01-M
