Energy and Water Use Labeling for Consumer Products Under the Energy Policy and Conservation Act (“Energy Labeling Rule”)

AGENCY:

Federal Trade Commission (FTC or Commission).

ACTION:

Final rule.

SUMMARY:

The Commission issues conforming amendments to the Energy Labeling Rule (“Rule”) to require a new Department of Energy (DOE) test procedure for televisions and establish data reporting requirements for those products.

DATES:

The amendments are effective on May 9, 2014.

ADDRESSES:

Requests for copies of this document should be sent to: Public Reference Branch, Room 130, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580. The complete record of this proceeding is also available at that address. Relevant portions of the proceeding, including this document, are available at http://www.ftc.gov .

FOR FURTHER INFORMATION CONTACT:

Hampton Newsome, (202) 326-2889, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

The Commission's Energy Labeling Rule (Rule) (16 CFR part 305), issued pursuant to the Energy Policy and Conservation Act (EPCA), requires energy labeling for major household appliances and other consumer products to help consumers compare competing models. When first published in 1979, the Rule applied to eight product categories: refrigerators, refrigerator-freezers, freezers, dishwashers, water heaters, clothes washers, room air conditioners, and furnaces. The Commission has since expanded the Rule's coverage to include central air conditioners, heat pumps, plumbing products, lighting products, ceiling fans, certain types of water heaters, and televisions.

The Rule requires manufacturers to attach yellow EnergyGuide labels on many of these products, and prohibits retailers from removing the labels or rendering them illegible. In addition, the Rule directs sellers, including retailers, to post label information on Web sites and in paper catalogs from which consumers can order products. EnergyGuide labels for covered appliances must contain three key disclosures: estimated annual energy cost (for most products); a product's energy consumption or energy efficiency rating as determined from DOE test procedures; and a comparability range displaying the highest and lowest energy costs or efficiency ratings for all similar models. For energy cost calculations, the Rule specifies national average costs for applicable energy sources (e.g., electricity, natural gas, oil) as calculated by DOE. The Rule sets a five-year schedule for updating range of comparability and average unit energy cost information. The Commission updates the range information based on manufacturer data submitted pursuant to the Rule's reporting requirements.

II. Final Amendments

The Commission issues conforming amendments to revise the Rule's television testing and reporting requirements in response to a new DOE television test procedure published on October 25, 2013 (78 FR 63823). The Commission proposed these amendments in a Notice published on December 26, 2013 (78 FR 78305) and received two comments. These amendments will ensure the Rule's television labeling requirements are consistent with EPCA, which mandates that FTC labels reflect applicable DOE test procedures.

Background: When the Commission first issued labeling requirements for televisions in 2011 (76 FR 1038 (Jan. 6, 2011)), no DOE test procedure existed for such products. Accordingly, the FTC required manufacturers to use the Environmental Protection Agency's (EPA's) ENERGY STAR test procedure to measure television energy use. However, as discussed in several previous Federal Register documents, the Commission anticipated that amendments would be necessary after completion of the DOE test procedure. DOE recently completed its test procedure, which manufacturers must begin using on April 23, 2014.

To conform the labeling rule to the new DOE test procedure, the Commission proposed three amendments. First, it proposed removing the Rule's reference to the ENERGY STAR test in section 305.5 and replacing it with the DOE procedure. Second, the Commission proposed a new reporting requirement for televisions consistent with requirements for most other labeled products, such as refrigerators and clothes washers. Manufacturers would be allowed to submit their new television data through the DOE's web-based reporting tool, the Compliance and Certification Management System (CCMS). To ensure adequate time after April 23, 2014 for the first round of data reports, the Commission proposed to set a May 1 date for annual submissions (section 305.8). After the Commission reviews the new data, it will consider issuing updated comparability ranges for television labels. Finally, the amendments update the definition of “television” in section 305.3 to incorporate DOE's definition of that term and to limit labeling coverage to the scope of DOE's test procedure. For the most part, DOE's definition of “television” and the coverage of its test procedure are consistent with FTC's current rule. However, DOE determined not to cover very small models with screen sizes of 15 inches or less in its procedure because consumers often do not use such devices as typical televisions.

Comments: The commenters did not oppose the amendments. However, they raised three minor issues. First, CEA and Panasonic asked whether models discontinued in the previous year should be included in the initial 2014 data report. Second, Panasonic asked whether manufacturers may report energy use figures that are more conservative (i.e., showing higher energy use) than the test values. Finally, CEA, though recognizing EPCA's mandate to tie television labeling to the DOE test procedure, noted that the DOE test procedure may not keep pace with the market and thus may pose challenges to the quality and credibility of the EnergyGuide and ENERGY STAR programs in the future.

Discussion: The Commission issues the final amendments mostly as proposed in the December 26, 2013 Proposed Rule. However, to ensure manufacturers have adequate time to submit reports this year, the Commission has set the annual reporting date for June 1, instead of May 1. In response to comments, the Commission advises that the initial 2014 data submissions need only include models currently in production, and manufacturers should not include test data for models already discontinued. In addition, as discussed in a final rule last year, the Commission concurs with DOE guidance allowing manufacturers to rate models more conservatively than the tested performance. Finally, while the FTC is obligated to require the DOE test procedure, the FTC staff will work with DOE to identify the need for possible test procedure changes should they become necessary in the future.

III. Paperwork Reduction Act

The current Rule contains recordkeeping, disclosure, testing, and reporting requirements that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (OMB) regulations that implement the Paperwork Reduction Act (PRA). OMB has approved the Rule's existing information collection requirements through February 29, 2016 (OMB Control No. 3084-0069). The Commission accounted for the burden of testing and labeling televisions when it first issued the labeling requirements (76 FR 1038 (Jan. 6, 2011)). However, the new DOE test procedure triggers EPCA's requirement that manufacturers retest their televisions for any energy representations made 180 days after DOE publishes the test, including those on the FTC label. This creates an additional, one-time burden. Accordingly, the Commission is submitting these amendments to OMB for review.

In issuing the television labels, FTC staff estimated that 2,000 basic models exist in the marketplace, that manufacturers test two units per model, and that testing requires one hour per unit tested. Using these estimates, the Commission expects the new testing will require a one-time burden of 4,000 additional hours of burden. Annualized over a 3-year PRA clearance cycle, this one-time burden amounts to 1,333 hours. Assuming further that this testing will be implemented by electrical engineers, and applying an associated hourly wage rate of $44.14 per hour, labor costs for testing would annualized total of $58,839. In addition, the amendments would increase the Rule's reporting requirements. Staff estimates that the average reporting burden for these manufacturers is approximately two minutes per basic model to enter information into DOE's online database. Based on this estimate, multiplied by an estimated total of 2,000 basic television models, the annual reporting burden for manufacturers is an estimated 67 hours (2 minutes × 2,000 models ÷ 60 minutes per hour). Assuming further that these filing requirements will be implemented by data entry workers at an hourly wage rate of $15.11 per hour, the associated labor cost for recordkeeping would be approximately $1,012 per year. Any non-labor costs associated with the amendments are likely to be minimal.

IV. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires that the Commission provide an Initial Regulatory Flexibility Analysis (IRFA) with a Proposed Rule and a Final Regulatory Flexibility Analysis (FRFA), if any, with the Final Rule, unless the Commission certifies that the Rule will not have a significant economic impact on a substantial number of small entities.

The Commission does not anticipate that the Final Rule will have a significant economic impact on a substantial number of small entities. Consistent with past analysis (76 FR at 1049), the Commission estimates that these new requirements will apply to about 30 product manufacturers. Out of these companies, the Commission expects that no manufacturers qualify as small businesses. Furthermore, the Commission does not expect that the requirements specified in the Final Rule will have a significant economic impact on these entities.

Although the Commission certified under the RFA that the amendments would not, if promulgated, have a significant economic impact on a substantial number of small entities, the Commission has determined, nonetheless, that it is appropriate to publish an FRFA in order to explain the impact of the amendments on small entities as follows:

A. Statement of the Need for, and Objectives of, the Amendments

The Commission is proposing amendments to conform the Rule to a recently published DOE test procedure for televisions.

B. Issues Raised by Comments in Response to the IRFA

The Commission did not receive any comments specifically related to the impact of the final amendments on small businesses. The Commission did not receive any comments from the Small Business Administration in response to the proposed rule.

C. Estimate of Number of Small Entities to Which the Amendments Will Apply

Under the Small Business Size Standards issued by the Small Business Administration, television manufacturers qualify as small businesses if they have fewer than 1,000 employees (for other household appliances the figure is 500 employees) or if their sales are less than $8.0 million annually. The Commission believes that no manufacturers subject to the Final Rule qualify as small businesses.

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements

The Commission recognizes that the Final Rule will involve some increased costs related to reporting these products, and maintaining test records. All of these burdens and the skills required to comply are discussed in the previous section of this document, regarding the Paperwork Reduction Act, and there should be no difference in that burden as applied to small businesses.

E. Alternatives

The Commission sought comments on alternatives to the Proposed Rule, including a delay in the effective dates for the amendments. However, no commenters suggested any changes to the proposed amendments. Accordingly, the Commission issues the amendments as proposed.

Final Rule

List of Subjects in 16 CFR Part 305

• Advertising
• Energy conservation
• Household appliances
• Labeling
• Reporting and recordkeeping requirements

For the reasons set out above, the Commission amends 16 CFR part 305 as follows:

PART 305—ENERGY AND WATER USE LABELING FOR CONSUMER PRODUCTS UNDER THE ENERGY POLICY AND CONSERVATION ACT (“ENERGY LABELING RULE”)

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

Authority: 42 U.S.C. 6294.

2. In § 305.3, revise paragraph (y) to read as follows:

3. In § 305.5, revise paragraph (d) and remove paragraph (e), as follows:

4. In § 305.8, revise paragraphs (a)(1) and (3), add new paragraph (a)(4), and revise paragraph (b)(1) to read as follows:

5. In § 305.17, remove paragraph (h).