Federal Register, Volume 68 Issue 117 (Wednesday, June 18, 2003)

[Federal Register Volume 68, Number 117 (Wednesday, June 18, 2003)]
[Rules and Regulations]
[Pages 36458-36466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15369]

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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 and conditional exemption.

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SUMMARY: The Federal Trade Commission (``Commission'') announces
amendments to the Appliance Labeling Rule and the issuance of a
conditional exemption in response to a request from the Association of
Home Appliance Manufacturers (``AHAM'') related to certain labeling
requirements for clothes washers.

DATES: The effective date of the amendments to 16 CFR part 305 is
January 1, 2004. The effective date of the conditional exemption
described herein is June 11, 2003.

FOR FURTHER INFORMATION CONTACT: Hampton Newsome, Attorney, Division of
Enforcement, Federal Trade Commission, Washington, DC 20580, (202) 326-
2889.

SUPPLEMENTARY INFORMATION:

I. Background

A. FTC Requirements

The Commission issued the Appliance Labeling Rule in 1979, 44 FR
66466 (Nov. 19, 1979) (``Rule''), in response to a directive in the
Energy Policy and Conservation Act of 1975 (``EPCA'') (42 U.S.C. 6294).
EPCA also requires the Department of Energy (``DOE'') to develop test
procedures that measure how much energy certain appliances use, and to
determine the representative average cost a consumer pays for the
different types of available energy.
The rule covers, among other things, eight categories of major
household appliances: refrigerators and

[[Page 36459]]

refrigerator-freezers, freezers, dishwashers, clothes washers, water
heaters, room air conditioners, furnaces, and central air conditioners.
The rule requires manufacturers of all covered appliances to disclose
specific energy consumption or efficiency information (derived from the
DOE test procedures) at the point of sale in the form of an
``EnergyGuide'' label and in catalogs. The rule requires manufacturers
to include, on labels, an energy consumption or efficiency figure and a
``range of comparability.'' This range shows the highest and lowest
energy consumption or efficiencies for all comparable appliance models
so consumers can compare the energy consumption or efficiency of other
models similar to the labeled model.
The rule requires manufacturers, after filing an initial report, to
report annually the estimated annual energy consumption or energy
efficiency ratings for the appliances derived from tests performed
pursuant to the DOE test procedures. 16 CFR 305.8(b). Because
manufacturers regularly add new models to their lines, improve existing
models, and drop others, the database from which the ranges of
comparability are calculated is constantly changing. Under section
305.10 of the rule, to keep the required information on labels
consistent with these changes, the Commission publishes new ranges (but
not more often than annually) if an analysis of the new information
indicates that the upper or lower limits of the ranges have changed by
more than 15%. Otherwise, the Commission publishes a statement that the
prior ranges remain in effect for the next year.

B. New DOE Test Procedure and Energy Standards for Clothes Washers

New energy conservation standards and a new DOE test procedure for
clothes washers will become effective on January 1, 2004. The new
energy conservation standard requires that all new residential clothes
washers manufactured after January 1, 2004, be 22% more efficient than
today's minimally compliant clothes washer.\1\ Accordingly, the 2004
energy standard will render a substantial portion of the existing
clothes washer market obsolete.
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\1\ 66 FR 3314, 3315 (Jan. 12, 2001). A second amended energy
efficiency standard, slated to take effect on January 1, 2007,
requires that all new residential clothes washers manufactured after
that date be 35% more efficient than today's minimally compliant
clothes washer.
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The new DOE test procedure for clothes washers, which also will
become effective on January 1, 2004, is found at 10 CFR part 430,
subpart B, Appendix J1.\2\ Application of the new test procedure
(sometimes referred to as the ``J1'' test or the ``Modified Energy
Factor'' test) will likely produce energy consumption figures different
from those yielded by the old (``J'') test procedure (10 CFR part 430,
subpart B, Appendix J).\3\ Because these test results are used to
determine energy use information that appears on the FTC EnergyGuide
label, consumers may not be able effectively to compare the energy
performance of clothes washers if the labels are based on the two
different test procedures.
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\2\ The EnergyStar program, run by DOE and the U.S.
Environmental Protection Agency, already requires use of the new
(J1) test to certify clothes washers under that program.
\3\ According to AHAM, the clothes washer test procedures were
revised to better reflect current usage habits by incorporating
updated temperature utilization factors that are more appropriate
for today's designs.
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II. AHAM's Request

To ease the transition to the new energy efficiency standard and
new (J1) test procedure, AHAM \4\ wrote to FTC staff on February 7,
2003, requesting permission to begin using that test for labeling
clothes washers during 2003, before the test becomes effective. In
addition, AHAM's letter requests that the Commission allow its members
to provide special wording on the EnergyGuide labels for these models
to help consumers in distinguishing washers tested under the new (J1)
procedure from those tested under the old (J) procedure (see Prototype
Label 2 at the end of this document). AHAM proposed a modified label
that would display a banner across the top stating: ``This Model has
been Tested to the 2004 Test Procedure. Compare only with Models with
this Notice.'' AHAM requested that the Commission allow its members to
begin using the new (J1) test and modified labels on May 1, 2003, and
that the labeling changes be made ``permanent.''\5\ To grant AHAM's
request, the Commission would have to grant an exemption from certain
EnergyGuide testing and labeling requirements for the remainder of this
year and issue rule amendments to make the requested labeling changes a
permanent requirement for all manufacturers after January 1, 2004.
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\4\ The manufacturers identified in AHAM's request are Alliance
Laundry Systems, Electrolux Home Products, Fisher & Paykel Ltd., GE
Appliances, Maytag Appliances, Miele Corp., and Whirlpool Corp.
Subsequently, AHAM informed Commission staff that BSH, Gonrenje, and
Asko also are participating in AHAM's request. According to AHAM,
these manufacturers produce over 95% of the clothes washers sold in
the United States.
\5\ AHAM also requested that the Commission change the reporting
date for clothes washer data in the rule from March 1 to October 1
for each year. The Commission addressed the requested date change
for data submission in an earlier Federal Register document (see 68
FR 8448 (Feb. 21, 2003)).
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AHAM submitted its request because it asserts that the transition
to clothes washers compliant with the new 2004 energy efficiency
standard and new test procedure, with respect to testing and labeling,
could be unduly burdensome to manufacturers and confusing to consumers.
According to AHAM, there will be hundreds of new energy efficient
models introduced throughout the course of 2003. Under current
requirements, manufacturers will have to test and rate these new models
first under the old (J) procedure for 2003, and then again under the
new (J1) procedure in order to distribute them in 2004. AHAM stated
that, since several samples of each basic model need to be tested to
determine statistically valid ratings, such duplicative testing would
result in tremendous laboratory and manufacturer staff resources for
hundreds of new models. Also, AHAM states that retail floor models are
not changed frequently. Thus, without action by the FTC, retail display
units for new models introduced this year will have energy labels based
on the old (J) test well into 2004 and beyond. AHAM is concerned that
these display units could be very confusing and misleading as consumers
seek to compare units tested under different procedures in a single
showroom without any notice that differences exist.

III. Proposed Exemption and Proposed Rulemaking

In an April 3, 2003, document (68 FR 16231), the Commission sought
comments on AHAM's proposal. The proposal raised two procedural
matters: (1) A request for an exemption from certain testing and
labeling requirements for clothes washers from May through December 31,
2003 (to permit testing and labeling pursuant to the new (J1) test);
and (2) a proposed ``permanent'' rule change, effective January 1,
2004, to conform existing label content and format requirements to
label changes permitted by the 2003 exemption.

A. Proposed Conditional Exemption for 2003

The proposed exemption implicated several provisions of the
Appliance Labeling rule. The rule requires that, for purposes of the
EnergyGuide label, manufacturers use the estimated annual energy
consumption as derived from the DOE clothes washer test procedures in
10 CFR part 430 (see 16 CFR 305.5(a)

[[Page 36460]]

and 305.11(a)(5)(i)(E)). Because the new (J1) test for clothes washers
will not become effective until January 1, 2004, the current rule does
not authorize the use of that test for energy consumption information
on EnergyGuide labels until that date. By granting the requested
exemption, the Commission would allow manufacturers to begin using the
new test results on EnergyGuide labels before 2004. In addition, the
rule does not allow any marks or identification other than those
specified in the rule to appear on the label except for some limited
exceptions not applicable here (see 16 CFR 305.11(a)(5)(i)(K)).
Accordingly, absent an exemption, the rule does not allow the kind of
explanatory information proposed by AHAM.

B. Proposed Rule Change for EnergyGuide Labels for 2004 and Beyond

In the April 3, 2003, document, the Commission indicated that, by
granting the exemption, it is probable that many new clothes washers
distributed for sale in the United States for the remainder of 2003
would have labels containing the proposed advisory language that:
``This Model has been Tested to the 2004 Test Procedure. Compare only
with Models with this Notice.'' Once this change is made to EnergyGuide
labels on units distributed in 2003, a return to the conventional label
in the future may cause consumer confusion because the units with the
modified label will stay on showroom floors into 2004 and beyond. Given
these considerations, AHAM asked the Commission to make its proposed
label changes permanent. The Commission proposed that the advisory
language required by the rule after January 1, 2004, should be
identical to that on the label during the exemption period. The
Commission sought public comment on a proposed rule change that would
incorporate AHAM's suggested label changes and require these changes
for all clothes washers distributed for sale in the United States
beginning January 1, 2004.

IV. Comment Analysis

The Commission received four comments in response to the April 3,
2003, document.\6\ The three industry comments (from Alliance,
Whirlpool, and AHAM) supported the proposed conditional exemption and
rule change. AHAM stated that, ``early compliance with J1 labeling
requirements in 2003 is critical to the efficiency of testing and
production as the industry transitions to new washer standards by the
end of 2003.''\7\ Whirlpool echoed AHAM's comment, adding that, without
the conditional exemption, it would be not be able ``to meet existing
commitments to trade partners.''\8\ These three commenters also
supported the proposal to make the changes to the EnergyGuide label
permanent. The fourth commenter, NRCan (the agency responsible for
appliance labeling in Canada), raised concerns about the impact of the
proposal on adjoining labels bearing both the U.S. EnergyGuide and the
Canadian ``EnerGuide'' label (as allowed by the Commission's rule). An
analysis of specific issues raised by the comments follows:
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\6\ The Commission received comments from Alliance Laundry
Systems (``Alliance'') (1), Whirlpool Corporation (``Whirlpool'')
(2), AHAM (3), and Natural Resources Canada (``NRCan'') (4).
\7\ AHAM (3) p. 1.
\8\ Whirlpool (2) p. 3.
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A. Differences Between the J and J1 Tests

Comments
The Commission requested comments on whether the differences
between the results yielded by the new (J1) and old (J) tests are
significant enough to warrant special advisory language on the
EnergyGuide labels. The Commission also asked whether one test yields
significantly higher or lower results than the other. The three
industry comments indicated that the differences were significant
enough to warrant the change. Alliance stated that the tests yielded a
25% difference for one of its models.\9\ Whirlpool and AHAM commented
that the new (J1) test results are generally lower than the older (J)
test results and the differences could be as much as 40%.\10\
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\9\ Alliance (1) p. 1 (attachment).
\10\ AHAM (3) p. 2; Whirlpool (2) p. 4.
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Discussion
According to the commenters, the differences in energy use results
yielded by the two tests can be significant. Given this information, we
believe the explanatory text on the labels is appropriate to aid
consumers in distinguishing models tested under the two procedures. The
Commission notes that DOE periodically modifies the test procedure for
covered products and such changes can yield different test results for
the same model. In the past, the Commission has not required additional
information on the EnergyGuide label in response to test procedure
changes. In this case, however, there are special circumstances that,
in the Commission's view, warrant the explanatory language as requested
by AHAM. First, because the new conservation standard will become
effective on the same date as the new test procedure, a large number of
new models will appear on the market over a short period of time in
response to the more stringent efficiency standards. In addition, the
differences between the results of the old and new test procedures
could be quite substantial in this case, up to 40% as indicated by the
industry comments. Finally, because the exemption will allow
manufacturers to begin using the new (J1) test results for labeling
early, manufacturers will distribute new products with labels based on
the new test while they will continue to distribute older products with
labels reflecting the old test. Accordingly, the transition between the
old and new labels in showrooms will likely be longer than is usually
the case when DOE amends a test procedure. Considering all these
factors, the Commission believes that explanatory language as suggested
by AHAM is appropriate.

B. Content, Size, and Placement of the Modified Language

Comments
The Commission solicited comments on the proposed changes to the
label, such as the content, size, and placement of the modified
language on the EnergyGuide. The Commission asked whether the proposed
language on the EnergyGuide label will help consumers in their
purchasing decisions, or cause undue confusion. In addition, commenters
were asked whether the reference to the year ``2004'' on the label will
create confusion in subsequent years if the proposed change becomes a
permanent fixture on the label and whether the explanatory language
should be required on both the top and the bottom of the label. The
Commission sought comment on alternatives to the proposed advisory
language, such as using the term ``J1'' or ``Modified Energy Factor''
in lieu of ``2004'' in describing the test.
The three industry comments stated that the proposed changes are
appropriate and that the changes to the EnergyGuide label will help
consumers. Whirlpool stated that there will be less need for dealers to
``refloor'' model units and less confusion for ``energy conscientious
consumers when selecting new appliances.''\11\ The industry commenters
also preferred the reference to ``the 2004 procedure'' over other
descriptors such as ``J1'' or

[[Page 36461]]

``Modified Energy Factor'' because consumers would have ``no clue'' as
to the meaning of these latter terms.\12\ They did not believe it was
necessary to place the explanatory language on the bottom of the label
(in addition to the statements proposed for the top and middle of the
label). Whirlpool wrote that such information would be redundant for
consumers.\13\ Finally, AHAM and Alliance requested that the size of
the new label be 7\3/8\ inch (18.73 cm.) as currently required by the
Rule and not 8 inches (20.32 cm.) as proposed by the Commission.\14\
Alliance suggested that the use of a 7\3/8\ inch (18.73 cm.) label can
be accomplished by not incorporating the proposed text in the middle of
the label.\15\
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\11\ Whirlpool (2) p. 4
\12\ AHAM (3) p. 2; Alliance (1) p. 2; and Whirlpool (2) p. 4.
\13\ Whirlpool (2) p. 4.
\14\ AHAM (3) p. 2; Alliance (1) p. 2.
\15\ Alliance (1) p. 2.
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Discussion
The Commission agrees with the commenters that the ``2004''
language is preferable to alternatives such as ``J1'' and ``Modified
Energy Factor.'' It is possible that, in later years, the reference to
``2004'' on the label may raise questions for consumers. Ultimately,
however, we do not believe that this reference will have a significant
impact on consumers' ability to compare clothes washer energy use
because the relevant energy use and operating cost information will be
clearly marked on the label. Accordingly, we have retained the
reference to ``2004'' in the explanatory language for the final rule.
The Commission recognizes that it may not be desirable to retain
this ``2004'' reference on the clothes washer labels indefinitely.
Although the explanatory language will aid consumers during the
upcoming transition period, the language will eventually become
unnecessary because all models will carry the same label. The
Commission may consider eliminating the special advisory language from
the rule in the future. Each year, the Commission analyzes energy use
information submitted for all clothes washers sold in the United States
to determine whether the ranges of comparability for the EnergyGuide
labels should change. If the Commission determines to amend the ranges
in a given year, new labels printed as a result will display different
ranges and use updated information to calculate operating costs.
Accordingly, if there is perceived need to discontinue the explanatory
statements on the labels in the future, the issuance of new ranges
could provide the Commission with the opportunity to consider
eliminating the advisory language published here.
The Commission has decided to make minor revisions to the proposed
wording of the explanatory language. Instead of stating in the banner
on top of the label that, ``This Model has been Tested to the 2004 Test
Procedure. Compare only with Models with this Notice,'' the Commission
believes that it is preferable to state, ``This model has been tested
using the 2004 test procedure. Compare only with models displaying this
statement.'' Similarly, the Commission has changed the explanatory text
in the middle of the label to read: ``Compare the energy use of this
clothes washer only with models tested using the 2004 test procedure.''
These modifications replace the phrase ``Tested to the'' with ``tested
using the'' (emphasis added). In addition, the phrase ``with this
Notice'' in the top banner has been changed to ``displaying this
statement.'' The final language also eliminates stray capitalization
that appeared in the proposed language. The Commission believes these
minor changes will make it easier for consumers to understand the
intended message.
Finally, some commenters stated that the conventional size label
(7\3/8\ inches; 18.73 cm.) should be used for the exemption and final
rule instead of an 8 inch (20.32 cm.) label as proposed. Upon further
review, the existing label size (7\3/8\ inch; 18.73 cm.) will
accommodate the additional banner. We see no significant benefit to
requiring the proposed 8 inch (20.32 cm.) label instead of the
conventional 7\3/8\ inch (18.73 cm.) label. The Commission, however,
does not agree with Alliance that the modified language in the middle
of the label should be removed. This language in the middle of the
label reinforces the message provided by the explanatory information in
the top banner. Using existing font and format requirements for the
EnergyGuide label, the conventional (7\3/8\ inch; 18.73 cm.) label can
accommodate the explanatory language at the top and in the middle of
the label (as shown in Prototype Label 2).

C. Impact on Canadian and Mexican Labels

Comments
The Commission asked whether the implementation of AHAM's proposal
would cause consumer confusion for those units with EnergyGuide labels
adjoining energy labels required by Mexico or Canada. Manufacturers
using such joint labels generally print them on hang tags with the U.S.
label on one side and the Canadian label on the other. NRCan raised
concerns about the impact of the proposal for consumers examining these
adjoining labels. Beginning in 2004, NRCan will require an equivalent
of the J1 test for labeling purposes. That agency, however, may not
have time to harmonize fully with the FTC's exemption and rule if the
changes are implemented as proposed before then. Therefore, NRCan is
concerned that there may be confusion if both labels do not report the
same information on both sides. NRCan indicated, however, that it has
discussed options with the Canadian Appliance Manufacturers Association
and is willing to work to identify non-regulatory approaches to this
issue.\16\ Without such a resolution, manufacturers would continue to
use the Canadian equivalent of the old (J) test for new models sold in
Canada until the end of this year.
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\16\ NRCan (4) pp. 1-2.
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The other commenters believed that the proposal would not cause
confusion where adjoining labels are used. AHAM stated that the
EnergyGuide label is discernable from that of Mexico or Canada because
it is entirely in English, has a unique format, and clearly states that
the results are based on U.S. government tests. In addition, AHAM
suggested that the proposed J1 label would make it clear that the label
should only be compared with other labels bearing the same message.\17\
Alliance asserted that, ``[t]he Commission's first priority is to
provide accurate information to U.S. consumers, not withhold action or
information because of potential impacts to consumers in neighboring
countries.'' In its view, any confusion resulting from the change would
be far less than the confusion that would result if the Commission does
not issue the proposed exemption and amendment.\18\
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\17\ AHAM (3) p. 2; see also Whirlpool (2) p. 4.
\18\ Alliance (1) p. 2.
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Discussion
The Commission understands NRCan's concerns about the use of new
(J1) test data on labels and the advisory language related to that test
on adjoining U.S.-Canadian labels. We do not, however, believe that
these concerns warrant a change to the proposed conditional exemption
and rule amendments. Beginning January 1, 2004, all models distributed
in the U.S. and Canada will display labels based on the same test.
Before that time, it is

[[Page 36462]]

unclear whether manufacturers will distribute new models in Canada if,
in doing so, they will have to conduct the same double testing they
have sought to avoid through their petition to the Commission. In
addition, NRCan, as suggested in its comment, may identify a ``non-
regulatory'' solution that allows manufacturers to use the J1 test for
labels on products sold in Canada and thus eliminate these concerns
altogether.
Even assuming some new models are distributed this year bearing the
joint label, the Commission does not expect that differences between
the Canadian and U.S. labels will significantly impede consumers'
ability to compare the energy use of competing products. Since 1996,
the Commission's rule has allowed manufacturers to print the
EnergyGuide label directly adjoining the Canadian EnerGuide. See 16 CFR
305.11(5)(i)(I). The U.S. EnergyGuide label contains operating cost
information not found on the Canadian EnerGuide label. In addition,
range of comparability information on the FTC EnergyGuide label may not
be the same as that on the Canadian EnerGuide labels. We have no
evidence that these differences have caused confusion. As Alliance
suggests in its comments, the EnergyGuide's reference to U.S.
government tests alerts consumers that the label is intended for U.S.
consumers.\19\ In the long term, the Commission believes it is
important to harmonize the U.S. label with the Canadian label as much
as possible. Given the relatively short duration of the exemption
period and for the other reasons discussed above, however, the
Commission is not requiring any specific conditions for the exemption
with regard to adjoining labels.
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\19\ Alliance (1) p. 2.
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D. Benefits and Costs of the Conditional Exemption and Amendments

Comments
The Commission asked for comments on the economic impact of the
proposed rule and conditional exemption, including impacts on small
business. AHAM stated that the proposals would impose no additional
burdens on manufacturers and would assist manufacturers in meeting DOE
efficiency standards by January 1, 2004.\20\ Whirlpool added that it
would suffer serious consequences if the FTC failed to implement these
changes by early May.\21\ Alliance indicated that the proposal would
reduce a significant burden on manufacturers. It estimated that the
proposal would save that company 35 working days of one laboratory
technician dedicated to DOE energy testing.\22\
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\20\ AHAM (3) p. 3.
\21\ Whirlpool (2) p. 5.
\22\ Alliance (1) p. 2.
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Discussion
The manufacturers have described the burdens they are seeking to
avoid through the requested exemption. The Commission believes that
issuance of the exemption and final rule will help to avoid those
burdens while, at the same time, minimizing any consumer confusion
associated with the transition from the old Appendix J test procedure
to the new Appendix J1 procedure.

V. Final Conditional Exemption and Amendments

The Commission has considered the comments received and has decided
to issue the conditional exemption and amendments as detailed in this
section. The Commission believes that there are benefits to allowing
manufacturers to begin changing over to the new labels and test results
at this time. The exemption and rule change will allow manufacturers to
avoid testing their new products multiple times pursuant to two test
procedures for the purposes of FTC labeling.\23\ In addition, consumers
will obtain information based on the new test sooner. The Commission
also believes that the changes to the label will minimize consumer
confusion resulting from the exemption and transition to the new test
by alerting consumers that the energy use information on some labels is
derived from a new test procedure.
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\23\ As stated in the proposal, it is the Commission's
understanding that AHAM's members intend to test new models under
the new (J1) test procedure and use limited testing under the old
(J) procedure to develop data for the purposes of DOE and FTC
reporting requirements during the remainder of 2003. 64 FR at 16232.
The final conditional exemption and rule amendments announced in
this document apply only to FTC labeling requirements and do not
change existing DOE requirements or otherwise relieve manufacturers
from complying with DOE requirements.
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A. Final Conditional Exemption

The Commission grants AHAM's request for an exemption from the
requirements in 16 CFR 305.5(a) and 305.11(a) only to the extent
required to allow manufacturers to:
(1) Use the test procedure in 10 CFR part 430, subpart B, Appendix
J1 for determining the energy use figure printed on EnergyGuide labels
of clothes washers distributed between June 11, 2003, and December 31,
2003;\24\ and
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\24\ The April 3, 2003, Federal Register document proposed that
the exemption period begin May 1, 2003 (see 68 FR at 16233). This
date is now infeasible given the timing of the April 3 document's
publication.
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(2) For such models, use EnergyGuide labels that contain the
following modifications to the format and content requirements in 16
CFR 305.11, as illustrated in Prototype Label 2 at the end of this
document:
(a) The use of the statement ``Compare the energy use of this
clothes washer only with other models tested using the 2004 test
procedure'' in lieu of the statement ``Compare the Energy Use of this
Clothes Washer with Others Before You Buy''; and
(b) The use of the statement ``This model has been tested using the
2004 test procedure. Compare only with models displaying this
statement.'' in a 10/16 inch (1.59 cm.) in height, process black bar
across the top of the label.
The Commission grants the exemption with the following conditions:
(1) That any manufacturers using this exemption must use it for all
clothes washer models introduced between June 11, 2003, and December
31, 2003 (they may also use it for existing models that meet the new
conservation standard), and (2) the modified EnergyGuide label must be
used if the new (J1) test is used to derive energy use information on
the EnergyGuide label for clothes washers. The manufacturers remain
obliged to comply with all other Rule requirements. Manufacturers not
specifically named in AHAM's request may use this exemption as long as
they follow the conditions specified by the Commission.\25\
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\25\ Given the limited duration of this conditional exemption,
the Commission is not incorporating the exemption into the text of
the rule (see 16 CFR 305.19).
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B. Final Amendments

After considering the comments, the Commission has determined to
issue the final rule as described in this section. To avoid confusion
that may result from switching back to the conventional label after the
exemption period, the Commission believes that is preferable to amend
the Rule to require the explanatory language on EnergyGuide labels for
all models beginning January 1, 2004. These label changes are identical
to those allowed by the conditional exemption. The final amendments
published here will minimize consumer confusion that could result from
a return to the conventional label at the end of the exemption period.

[[Page 36463]]

Consistent with the conditional exemption, the final rule does not
require an 8 inch label as proposed but instead retains the 7\3/8\ inch
(18.73 cm.) length currently required by the Rule. In addition, the
final rule incorporates the minor wording and format changes to the
explanatory statements described in the comment analysis and in the
description of the conditional exemption. The final rule changes are
printed at the end of this document. All manufacturers must follow
these requirements beginning January 1, 2004.\26\
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\26\ Prototype Label 2 in the final rule does not contain a
specific reference to the 10/16 inch height for the black bar across
the top of the label. Because the final graphic may not be to scale
as it appears in the Federal Register or the Code, specific
references to dimensions on the prototype label may be confusing.
The text of the rule clearly states the 10/16 (1.59 cm.) inch
requirement.
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VI. Regulatory Analysis and Regulatory Flexibility Act Requirements

Under section 22 of the FTC Act, 15 U.S.C. 57b, the Commission must
issue a regulatory analysis for a proceeding to amend a rule only when
it: (1) Estimates that the amendment will have an annual effect on the
national economy of $100,000,000 or more; (2) estimates that the
amendment will cause a substantial change in the cost or price of
certain categories of goods or services; or (3) otherwise determines
that the amendment will have a significant effect upon covered entities
or upon consumers. The Commission has determined that the exemption and
amendments to the rule will not have such effects on the national
economy, on the cost of covered products, or on covered parties or
consumers.
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
requires that agencies conduct analyses of the anticipated economic
impact of proposed amendments on small businesses. 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. 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.
There are approximately 20 manufacturers of clothes washers sold in
the United States. Most of these manufacturers are relatively
large.\27\ Because the clothes washer requirements of the Appliance
Labeling rule cover a limited number of manufacturers, most of which
are large, the Commission does not believe the proposed amendments or
exemption will affect a substantial number of small businesses. In any
event, the proposed amendments and exemptions are unlikely to have a
significant economic impact upon such entities, if any. Specifically,
the proposed rule and exemption involve minor text changes to labels
already required by the rule. The content of these labels must be
changed in response to new ranges of comparability published by the
Commission from time to time. Moreover, for the reasons explained
earlier, the final rule amendments and exemption are expected to lessen
the compliance burdens that would be imposed on regulated entities if
they were not permitted to label their products in accordance with the
2004 test procedures before those procedures officially take effect. In
the Commission's view, the amendments and exemption should not have a
significant or disproportionate impact on the costs of small
manufacturers and retailers.
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\27\ Although no comments were received regarding the size of
manufacturers subject to the Rule, the Commission believes that few
would qualify as a small business under the relevant threshold
(i.e., 1000 employees). See http://www.sba.gov/size/sizetable2002.html (Small Business Standards Matched To North
American Industry Classification System, Code 335224, Household
Laundry Equipment Manufacturing).
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Based on available information, therefore, the Commission certifies
that these amendments to the Appliance Labeling rule and the issuance
of the requested exemption will not have a significant economic impact
on a substantial number of small businesses.

VII. Paperwork Reduction Act

In a 1988 notice (53 FR 22113), the Commission stated that the Rule
contains disclosure and reporting requirements that constitute
``information collection requirements'' as defined by 5 CFR 1320.7(c),
the regulation that implements the Paperwork Reduction Act.\28\ The
Commission noted that the rule had been reviewed and approved by the
Office of Management and Budget (``OMB'') and has been assigned OMB
Control No. 3084-0068 with respect to the rule's recordkeeping and
reporting requirements until September 30, 2004, subject to further
renewal. The exemption and amendments issued in this document do not
change the substance, frequency of the recordkeeping, disclosure, or
reporting requirements and, therefore, do not require further OMB
clearance.\29\
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\28\ 44 U.S.C. 3501-20.
\29\ The exemption and final rule amendments may modify the
existing burden slightly by requiring additional information on the
labels. However, because the labels are already required and their
content changes from time to time when ranges of comparability are
amended, we believe that the overall impact of this final rule and
exemption is negligible and does not significantly alter the rule's
overall burden.
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List of Subjects in 16 CFR Part 305

Advertising, Energy conservation, Household appliances, Labeling,
Reporting and recordkeeping requirements.

VIII. Final Rule Amendments

0
For the reasons set out in the preamble, the Federal Trade Commission
amends 16 CFR part 305 as follows:

PART 305--[AMENDED]

0
1. The authority citation for part 305 continues to read as follows:

Authority: 42 U.S.C. 6294.

0
2. Amend Sec. 305.11 by revising paragraph (a)(5)(i)(A) and adding new
paragraph (a)(5)(i)(L) to read as follows:

Sec. 305.11 Labeling for covered products.

(a) * * *
(5) * * *
(i) * * *
(A) Headlines and texts, as illustrated in the Prototype Labels in
Appendix L to this Part, are standard for all labels except clothes
washer labels, which must have the text and features described in
305.11(a)(5)(i)(L) of this part.
* * * * *
(L) Clothes washer labels must have the headlines and texts as
illustrated in Prototype Label 2 of Appendix L of this Part. In
particular, clothes washer labels must have the following headline as
illustrated in Prototype Label 2: ``Compare the energy use of this
clothes washer only with other models tested using the 2004 test
procedure.'' In addition to the requirements for other labels, clothes
washer labels must have a 10/16 inch (1.59 cm.) in height, process
black bar across the top that contains the following text in process
yellow as illustrated in Prototype Label 2: ``This model has been
tested using the 2004 test procedure. Compare only with models
displaying this statement.''
* * * * *

0
3. Appendix L to part 305 is amended by revising Prototype Label 2 and
Sample Label 3 to read as follows:

Appendix L to Part 305--Sample Labels

* * * * *
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* * * * *

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-15369 Filed 6-17-03; 8:45 am]
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