Energy Labeling Rule

AGENCY:

Federal Trade Commission (“FTC” or “Commission”).

ACTION:

Final rule.

SUMMARY:

The Commission issues final amendments to improve access to energy labels online and improve labels for refrigerators, ceiling fans, central air conditioners, and water heaters. The Commission is issuing these amendments to assist consumers in their purchasing decisions and ensure labels are consistent with Department of Energy requirements.

DATES:

The amendments to 16 CFR 305.3(x), 305.13, and Sample Label 17 of Appendix L are effective on September 17, 2018. All other amendments published in this document are effective on June 12, 2017.

ADDRESSES:

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 issued the Energy Labeling Rule (“Rule”) in 1979, pursuant to the Energy Policy and Conservation Act of 1975 (EPCA). The Rule requires energy labeling for major home appliances and other consumer products to help consumers compare competing models. It also contains labeling requirements for refrigerators, refrigerator-freezers, freezers, dishwashers, water heaters, clothes washers, room air conditioners, furnaces, central air conditioners, heat pumps, plumbing products, lighting products, ceiling fans, and televisions.

The Rule requires manufacturers to attach yellow EnergyGuide labels to many of the covered products and prohibits retailers from removing these labels or rendering them illegible. In addition, it directs sellers, including retailers, to post label information on Web sites and in paper catalogs from which consumers can order products. EnergyGuide labels for most covered products contain three key disclosures: Estimated annual energy cost; 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 cost calculations, the Rule specifies national average costs for applicable energy sources (e.g., electricity, natural gas, oil) as calculated by DOE. Under the Rule, the Commission periodically updates comparability range and annual energy cost information based on manufacturer data submitted pursuant to the Rule's reporting requirements.

II. Final Amendments to the Energy Labeling Rule

In a November 2, 2015 Notice of Proposed Rulemaking (“2015 NPRM” or “NPRM”), the Commission sought comment on several proposed changes to the Energy Labeling Rule. The Commission received 17 comments in response. Pursuant to the NPRM and these comments, this final rule contains amendments for an online label database (label image reporting), revised ceiling fan labels, new refrigerator comparability range information, dual-mode refrigerator labeling, revised central air conditioner labels, and revised water heater labels. In a separate notice, the Commission will seek comments on issues that involve recent DOE regulatory actions or new issues raised by commenters in this proceeding, including portable air conditioner labeling, plumbing disclosures changes, large ceiling fan labels, and electric instantaneous water heater labeling.

A. Online Label Database

Background: In the NPRM, the Commission sought comments on the development of a centralized label database to provide retailers and consumers with convenient access to energy labels. To create such a comprehensive database, the Commission specifically proposed requiring manufacturers to submit links to their EnergyGuide and Lighting Facts labels through their routine report to the DOE's Compliance Certification Management System (CCMS) pursuant to section 305.8. The NPRM explained that this proposal would give online retailers access to digital labels for advertising or label replacement, obviating the need to obtain labels from individual manufacturers. The Commission explained that access to a single comprehensive database containing all the covered labels would benefit both consumers and retailers. Retailers could use the data for advertising and replacing missing labels for their display models, and consumers could use it to easily research comparative efficiency.

In the NPRM, the Commission predicted this proposal was unlikely to create undue burdens on manufacturers. The current Rule already requires manufacturers to post product labels on their own sites. It also requires manufacturers of most covered products to submit annual reports, although such reporting requirements are largely harmonized with DOE's. The proposed FTC requirements would allow manufacturers to submit their label links through DOE's CCMS. Under the proposal, manufacturers would submit the label links prior to distributing their products in commerce, consistent with current labeling requirements. The Commission also explained that it planned to give industry members ample time to make any necessary changes to their Web sites to facilitate compliance.

Comments: The commenters split in their support of the proposed reporting requirements. Appliance and ceiling fan manufacturers objected, asserting it would create burdens, questioning its utility, and raising several legal concerns. Conversely, energy efficiency and consumer groups, retail sellers, and heating and cooling equipment manufacturers generally supported the proposal, while providing a few suggestions discussed below.

Critics argued that the proposal's costs outweigh its benefits. AHAM, representing appliance manufacturers, asserted that the label link submissions would increase manufacturer burdens while providing little benefit to consumers and retailers. Similarly, ALA, which represents ceiling fan manufacturers, added that the proposal would complicate existing requirements and pose significant added burdens. ALA also questioned the need for the change, arguing that ceiling fan customers are already comfortable with using existing Web sites to comparison shop. AHAM, as well as GEA, further explained the requirement would create difficult coordination issues between various manufacture-related teams (e.g., engineering, design, Web site, etc.) and would delay product deployment. According to AHAM and Whirlpool, even short delays could cause manufacturers to miss deadlines and significantly disrupt business, jeopardizing a manufacturer's market position and causing financial loss. In addition, AHAM argued that the proposal could lead to the premature disclosure of competitive information, such as capacity and energy efficiency, several weeks before such information is normally available to competitors. Finally, these commenters indicated that frequent Web site changes would pose additional compliance burdens, particularly if manufacturers had to change their certification reports every time they change labels on their Web site.

In addition to these concerns about the proposal's burdens, AHAM raised two legal objections. First, it questioned whether EPCA grants the Commission authority to determine the content of DOE's reports. AHAM noted that the Commission streamlined the data reporting requirements in 2013 by permitting manufacturers to file their FTC-required annual reports on DOE's CCMS. However, in AHAM's view, that rulemaking differed from the present proposal because it “did not merge the DOE and FTC reporting requirements themselves.” According to AHAM, DOE is the agency with authority to require reporting on CCMS and, thus, DOE must effect changes to those reporting requirements through its own rulemaking. Second, AHAM argued the proposal would force manufacturers to violate DOE rules requiring manufacturers to certify that their covered products comply with applicable energy conservation standards. AHAM explained that, before distributing any basic model in commerce, manufacturers must submit a certification report to DOE. In determining whether a model has been “distributed in commerce,” DOE considers several factors, including whether the units have appeared in public marketing material (e.g., on Web sites or in catalogs), whether such marketing material includes energy efficiency information, and whether the manufacturer has shown the unit at a trade show. Therefore, to avoid distributing a product in commerce prior to certification, manufacturers typically do not publicly release energy labels until a basic model has been certified to DOE. AHAM warned that the FTC proposal could force manufacturers to violate DOE requirements by forcing them to upload their energy labels prior to DOE certification.

In contrast, many commenters supported the proposal. The Joint Commenters argued that the benefits of a centralized label database greatly exceed the burden imposed on manufacturers. Amazon, an online retailer that sells covered products, explained that the “database would allow consumers to easily research the comparative efficiency of covered products” and will help increase Rule compliance and decrease mislabeling. According to Amazon, the proposal would not impose undue burdens on manufacturers because the Rule already directs them to have the labels available on a Web site.

However, these commenters qualified their support with several recommendations. First, Amazon urged the Commission to require manufacturers to submit labels “as a stand-alone image in a standardized format.” It also recommended that the Rule require a UPC (universal product code) and label date information. Second, the Joint Commenters urged the Commission to extend the Rule to cover products not presently subject to reporting requirements, such as specialty consumer lamps and LED general service lamps. They asserted this extension would help consumers compare products through DOE's database. The Joint Commenters further suggested that, even if the FTC does not require label reporting for those products, it should provide manufacturers the option to submit such information. Finally, the Joint Commenters argued that DOE enforcement guidance can easily address any potential enforcement problems. In addition, to avoid any conflicts with DOE's requirements, they suggested that FTC allow manufacturers to delay activation of the Web site address submitted to CCMS for a certain time period after submittal (e.g., seven days after certification) so that manufacturers would not need to post labels prior to DOE certification.

Other industry commenters offered qualified support for the proposal. For instance, though backing the proposal generally, AHRI and Goodman recommended the Rule allow manufacturers to submit links to a PDF download of the labels, in addition to a URL. AHRI already maintains an online database as part of its own directory, which generates label PDFs for public users but not a URL link. According to AHRI, given this current arrangement, a mandatory URL link requirement would be costly and burdensome. Therefore, AHRI recommended the amendments allow manufacturers to submit a link to a PDF download to CCMS. AHRI explained that this would provide the same information as a URL, without significant additional costs and maintenance.

Some commenters suggested that the Commission allow manufacturers to provide a link to a general Web site containing their labels, instead of submitting links to individual labels. Lochinvar, a water heater manufacturer, argued this would give manufacturers flexibility in generating and maintaining the online EnergyGuide labels. Although Whirlpool opposed the proposal, it suggested the FTC give manufacturers more flexibility should it finalize the proposed reporting requirements. Specifically, it suggested the Rule allow manufacturers to submit a link to the manufacturer's online public database housing all EnergyGuide labels, searchable by model number. According to Whirlpool, consumers and retailers could then access the label by copying the model number from the CCMS into the manufacturer's site. This approach would also provide consumers and retailers access to additional information, such as installation instructions, use and care guides, and product dimensions. Whirlpool also recommended that FTC grandfather existing models currently in the CCMS to avoid the many hours necessary for manufacturers to retrieve EnergyGuide labels for thousands of models already in commerce.

Discussion: The final amendments require manufacturers to provide links to their online labels as part of the Rule's reporting requirements. Consistent with the other reporting provisions, the final amendment allows manufacturers to submit the links to DOE's CCMS as part of their normal FTC reporting. The new requirement will become effective in one year. After that date, manufacturers must begin submitting the required label links as part of all new model and annual reports required under section 305.8.

The final Rule contains several changes and clarifications to address commenters' concerns. First, the amendments allow manufacturers to submit their links when they certify their models to DOE or at the next subsequent annual report date. This eliminates concerns about posting labels prior to DOE certification and will ensure that labels are available online within a reasonable time period. Second, the final Rule provides manufacturers three options for submitting label information: (1) Through direct URL links to the labels themselves; (2) through links to a PDF download; or (3) through a link to a Web site from which users can obtain labels by searching through model number. If manufacturers use the third approach, the link must take the user directly to the search function on the manufacturer's Web site. These three options strike a balance between ensuring the labels are available from a central location and giving manufacturers flexibility in managing their own Web sites.

Contrary to one suggestion, the final Rule does not grandfather existing labels. Because some models remain in production for many years, the requested exemption would permanently exclude long-lived models from the database. However, to ensure manufacturers have ample time to comply, the final Rule will not become effective for one year after publication. Accordingly, manufacturers must begin submitting label links for existing models at the first applicable annual reporting date (see section 305.8) following this one-year period.

The final amendments do not include lighting products in the reporting requirements. Current law prohibits DOE from spending funds for the enforcement of DOE efficiency standards related to several types of light bulbs, including many currently subject to FTC labeling requirements. Therefore, to avoid potential DOE issues related to this prohibition, the Commission has not included lighting products in the new reporting requirement. It may revisit this issue at a later date should circumstances warrant.

Finally, the commenters questioned DOE and FTC authority to collect information on DOE's Web site without a separate DOE rulemaking. The Commission has identified no legal impediment to such an arrangement. As previously noted, the FTC is issuing the label image reporting requirements pursuant to its authority under EPCA. The final Rule does not impose separate DOE requirements and, therefore, DOE need not issue its own rule. In addition, these new FTC requirements are consistent with existing FTC reporting provisions, which apply both to products also covered by DOE's reporting requirements, as well as products DOE does not cover (i.e., televisions and ceiling fans). In issuing its own reporting requirements under section 305.8, the FTC has allowed manufacturers to submit data through DOE's existing online database to avoid duplication and complication. The final language clarifies that the amendments do not “merge” the two agencies' reporting requirements. Specifically, the final Rule language appears in section 305.8 (“Submission of Data”) rather than section 305.6 (“Duty to provide labels on Web sites”), and states that manufacturers may submit the information to DOE via CCMS in lieu of submitting it to the Commission.

B. Improved Ceiling Fan Labels

Background: In the 2015 NPRM, the Commission proposed revising the ceiling fan label to include estimated annual energy cost information as the label's primary disclosure and to otherwise ensure the label is consistent with other EnergyGuide labels. The current label, which appears on product boxes and bears the title “Energy Information,” discloses airflow (cubic feet per minute), energy use (watts), and energy efficiency (cubic feet per minute per watt) at high speed. However, as the Commission previously stated, consumer research suggests energy cost information is the most useful metric because it “provides a clear, understandable tool to allow consumers to compare the energy performance of different models.” The label proposed in the 2015 NPRM follows the EnergyGuide label format, consistent with other products displayed in showrooms, such as refrigerators and clothes washers.

In seeking comments on the label change, the Commission noted that DOE is in the process of changing test procedures and developing new efficiency standards for ceiling fans. As part of the test procedure proceeding, DOE is revising various factors essential to the label, including the representative hours of operation, a representative or average testing speed, and a revised product scope covered by the test procedure. In the 2015 NPRM, the Commission announced it would wait for DOE to complete its test procedure changes before finalizing the label. To ensure consistency with the DOE testing requirements, the Commission proposed to adopt final DOE use and operating assumptions for the amended label, including the hours of operation, the representative or average speed, and the revised product coverage. The Commission indicated it would allow a two-year compliance period for the new label, once DOE issues its final Rule.

Comments: Commenters generally supported the proposal. For example, the Joint Commenters noted that the two-year compliance period was consistent with the compliance period afforded to manufacturers for the original ceiling fan label issued in 2007 and that ceiling fan packaging already allocates space to FTC labels. However, some commenters raised logistical and implementation issues with the proposal. First, industry commenters urged the Commission to coordinate the timing of new labels with DOE efforts to revise the test procedure and set efficiency standards. ALA emphasized that manufacturers will need time to review the new requirements, develop and test products, and prepare new packaging with the revised labels. It agreed that a two-year compliance period is reasonable but encouraged the Commission to consider delaying enforcement action for an additional 18 months to allow for the resolution of unforeseen problems. Second, ALA raised concerns with the label's color because some manufacturers do not use color in printing their packages. It warned that a mandatory yellow background would significantly increase costs in some cases. To address this concern, ALA recommended the Rule allow a white background when a product package does not contain color. Also, given the small sizes of some fan packaging, it urged the Commission to ensure that the new label is no larger than the existing label.

Discussion: The Commission has revised the ceiling fan label consistent with its proposal. The final label's content includes new information to reflect the content of DOE's new test procedure published July 25, 2016. Such updates include DOE's new definition of “ceiling fan,” energy information based on the new DOE-mandated average fan speed, as well as the DOE-established hours of operation per day (6.4). The new label also contains comparability information based on DOE data for the products covered by the test procedure.

In response to some commenter concerns, the final Rule does not mandate a yellow background. Specifically, it indicates that the label must be printed on a yellow or other neutral contrasting background. This approach, also used for the Lighting Facts label, avoids imposing increased compliance costs.

Additionally, the final Rule requires manufacturers to begin labeling their packaging with the new label within two years of the final Rule's publication. Manufacturers may begin using the new label earlier, as soon as they complete testing under the new DOE test procedure.

Finally, the final label does not apply to large-diameter fans (i.e., fans with diameters of 84 inches or greater) and high-speed small diameter fans, new fan categories added by DOE's test proceeding. The DOE test procedure mandates unique operating assumptions (hours per day) for these particular models. As a result, labels for these two groups of fans may not offer accurate comparisons to more conventional fans. The Commission will seek comment on the need for, and content of, fan labels for those two product categories in a separate notice.

C. Consolidated Refrigerator Ranges

Background: Based on comments suggesting that a substantial number of consumers consider several different configurations when shopping, the 2015 NPRM proposed requiring disclosure of two cost ranges on the refrigerator label: One range for the existing applicable refrigerator configuration (e.g., side-by-side door configuration) and the other range covering all refrigerators. The Commission previously explained that providing cost information for all refrigerators consolidated into a single range would facilitate comparison shopping and alert consumers to the relative energy efficiency of various refrigerator types. Consistent with the current Rule, both range groups under the 2015 proposal would include separate ranges organized by capacity.

The current Rule organizes refrigerator comparability ranges by configuration (e.g., models with top-mounted freezers), designating eight separate categories for refrigerators and three for freezers. Five of those categories (or styles) apply to automatic-defrost refrigerator-freezers, which populate the bulk of showroom floors: Side-by-side door models with and without through-the-door ice service; top-mounted freezer models with and without through-the-door ice service; and bottom-mounted freezer models. The comparability ranges, which disclose the energy costs of the most and least efficient model in each category, allow consumers to easily compare the energy use of similarly configured units.

In the 2015 NPRM, the Commission explained that information submitted in earlier comments suggested that a substantial number of consumers consider models with different features when shopping. However, as explained in previous comments, not all shoppers do so. The proposal addressed both contingencies by allowing consumers to compare the labeled product to similar models as well as to all other refrigerators. The proposal also maintained the three freezer categories: Upright manual defrost models (Appendix B1), upright automatic defrost models (Appendix B2), and chest freezers (Appendix B3) because there is no evidence that consumers typically shop for models across these categories.

Additionally, the Commission proposed updated ranges based on new model data from the DOE database, including a new range reflecting consolidated range data for all refrigerators. Before issuing final refrigerator ranges, the Commission indicated that it would consider updating the numbers based on the most recent data. It also proposed to amend the range tables to cover bottom-mounted freezers with through-the-door ice, a popular product subcategory currently not covered by the various tables. To accomplish this, the proposed amendments redesignate Appendix A7, which currently covers an obsolete category (top-mounted freezer with through-the-door ice models). In addition, the proposal modifies the size categories in each table to ensure consistency in all the ranges across all sizes.

Comments: The commenters sharply split on the proposed refrigerator label. The Joint Commenters and the California IOUs supported the proposal, while AHAM, representing appliance manufacturers, opposed it. The supporters argued the Commission's proposal represents a reasonable compromise between the various available options. They explained that, while some shoppers are committed to models with particular features, others are more flexible and willing to trade off those features for reduced utility bills. The Joint Commenters also asserted the two comparison ranges on the proposed label were unlikely to confuse consumers. They noted that the EnergyGuide labels for heat pumps already feature two comparability ranges and have done so for nearly 30 years and that the label “clearly indicates what each range bar depicts.” The California IOUs argued the proposed label would continue to help customers understand a unit's energy cost relative to similarly configured products, particularly since many customers continue to shop for configurations matching their current model. These commenters further indicated that the second range displaying the unit's energy cost relative to a broader array of models serves to educate consumers about their potential buying choices, and contributes to a more informed decision-making process.

While they supported the overall proposal, the Joint Commenters urged the FTC to break the “All Models” range into three separate categories: Automatic defrost refrigerator-freezers, manual or partial automatic defrost refrigerators and refrigerator-freezers, and refrigerators with automatic defrost but no freezer. They noted that consumers do not frequently shop for refrigerator-only models (i.e., refrigerators with no freezer). In their view, some consumers may be disappointed to discover some of the high efficiency models reflected on the range have no freezer. According to the commenters, such a result could undermine consumer trust in EnergyGuide's comparison ranges for other products.

In contrast, AHAM opposed a consolidated range for the refrigerator label. Specifically, AHAM questioned the data supporting such a change. In particular, it argued that a study of EarthJustice members submitted in earlier comments surveyed biased respondents who may better understand energy consumption than the average consumer. In addition, AHAM stated that FTC has not demonstrated that consumers will understand the proposed label or that the consolidated range will assist their purchasing decisions. However, should FTC decide to move forward with changes, AHAM expressed a preference for the hybrid approach in the 2015 NPRM that includes two groups of ranges organized by both model subcategory and the consolidated range. AHAM stated this approach would preserve the opportunity for consumers to compare products of similar configuration and features. AHAM also suggested that FTC change the term “All Models” to indicate that the range depicts “all models of similar capacity” to avoid misleading consumers. It also asked the FTC to consider altering the current label to reduce the black ink required. According to AHAM, the ink required for this label increases drying times and printer jams. Finally, AHAM and Whirlpool urged the Commission to give manufacturers between six months and a year to implement the refrigerator changes to complete the many necessary activities for this change, including designing and contracting for the new labels, updating Web sites and certification reports, and coordinating between OEMs and private labelers.

Discussion: The Commission has amended the refrigerator labels as proposed and updated the comparability ranges. The revised label will likely help consumers shop among models by providing two types of comparative information, allowing consumers to compare the labeled product to similar models as well as to all other refrigerators. This hybrid approach reflects the likelihood that, while not all shoppers consider different configurations, a significant number do. The final Rule gives manufacturers nine months to implement the revised label. In response to commenter concerns over the black ink required for the label, the FTC staff will update the online label template for refrigerators and clothes washers to modify the black background to reduce the amount of ink consumed in printing the labels.

The new label should aid consumers in their shopping decisions. Information provided by commenters strongly suggests that a substantial number of consumers consider models with different features when shopping. The Commission agrees with AHAM that the email survey submitted by the Joint Commenters does not offer compelling evidence because it involved a self-selected population of respondents. However, other information in the record suggests that a significant number of consumers consider different model configurations when shopping. For example, according to earlier comments, 40% of the visitors to Consumer Reports' online refrigerator ratings in 2012 reviewed multiple refrigerator-freezer configurations. In addition, AHAM offered data indicating that only 46% of side-by-side refrigerator-freezer owners and 85% of top mount refrigerator-freezer owners replaced their units with the same configuration. These numbers strongly suggest that a substantial proportion of consumers, though not all, consider different configurations. Other indicia of consumer shopping habits corroborate this conclusion. Specifically, online refrigerator buying guides routinely advise consumers about considering different configurations. The content of such sites confirm that consumer preferences for configuration are not pre-determined. The new label will help both consumers who consider different configurations, and those who do not.

The Commission agrees with the Joint Commenters that the label change is unlikely to confuse consumers. The modification represents a relatively small addition to an existing element of the label's content; the primary focus of the label continues to be the cost of energy measured in dollars. In addition, the new label clearly identifies the two comparability ranges, as noted by the Joint Commenters, and provides additional information about those ranges in explanatory text. Accordingly, the Commission expects the two ranges will help improve consumer understanding of the trade-offs involved choosing a refrigerator. Although the Commission recognizes AHAM's concern about consumer understanding of the label, commenters did not provide evidence of confusion or of a more effective means of presenting this information. Nevertheless, to minimize potential concerns, the staff plans to prepare educational material about the label change.

The final Rule does not exclude certain refrigerators (i.e., refrigerator-freezer models without automatic defrost and refrigerator-only models covered by Appendices A1 through A3) from the “All Models” range, as suggested by some commenters. The new range tables, which have been updated in the final rule based on more recent DOE data, do not reveal large differences between these models and the more common automatic defrost models covered by Appendices A4 through A7. In addition, excluding these models from the comparability categories would require additional explanatory text and clutter the label with only a marginal benefit. Similarly, the revised label does not disclose on the range itself that the range applies to similarly sized models. Consistent with past versions of the label, such language appears on the lower part of the label. Including additional information about “similarly-sized models” would add text and crowd the label potentially affecting usability.

D. Dual Mode Refrigerator-Freezers

The final Rule contains an amendment related to dual mode refrigerator-freezers. In the NPRM, the Commission proposed adding a new provision addressing covered refrigerator models that can operate either as a refrigerator or a freezer under the DOE rules, depending on user settings. In 2014, DOE announced that these convertible models must be tested and certified to meet efficiency standards applicable to both refrigerators and freezers. AHAM sought clarification on labeling these products, suggesting that, consistent with manufacturers' labeling practices, convertible products be labeled with the most energy intensive configuration. In the 2015 NPRM, the Commission agreed with this approach because it ensured that labels for these products do not underestimate a product's energy cost. Therefore, the proposed Rule stated that these products should be labeled with the most energy intensive configuration. In response to the 2015 NPRM, AHAM supported the Commission's proposal, and no other commenters addressed the issue. Accordingly, the final Rule includes the proposed amendments for the dual mode refrigerator-freezers.

E. Heating and Cooling Equipment Label Requirements

Background: In the 2015 NPRM, the Commission proposed several amendments to the heating and cooling equipment label requirements, including label changes related to upcoming DOE enforcement requirements for regional standards, labels for rooftop furnace-air conditioner systems, manufacturer name disclosures, multiple model number disclosures, and a clarification to retailer disclosure requirements. The Commission discusses each of these issues below.

Revised Central Air Conditioner Labels Regarding Regional Standards: The Commission proposed several changes to the central air conditioner label in response to changes in DOE enforcement requirements regarding regional standards. The current EnergyGuide labels for these products provide industry members and consumers with information about regional efficiency standards issued by DOE in 2011. These DOE requirements impose regional efficiency standards for split-system air conditioners and single-package air conditioners. For all other covered heating and cooling equipment (e.g., furnaces and boilers), the updated standards remain nationally uniform. Since publication of the regional standards related-labels in 2013, the Commission has issued several notices updating ranges and labels to reflect a court-approved settlement that vacated DOE's regional standards for furnaces.

During the fall of 2014, DOE conducted a negotiated rulemaking to establish enforcement rules for current regional standards applicable to central air conditioners. The current standards set a minimum 14.0 Seasonal Energy Efficiency Ratio (SEER) for the southern and southwestern regions, a 13.0 SEER for all other areas, and separate Energy Efficiency Rating (EER) levels for the southwest region. For a particular condenser model, efficiency ratings vary (e.g., 13.0 to 14.2 SEER) depending on the condenser-coil combination installed in the consumer's home. Because such variability complicates efforts to enforce the regional standards, the consensus recommendation from the negotiated rulemaking advised DOE to determine regional compliance based on the condenser's lowest certified rating alone, not on the system rating (i.e., the specific condenser-coil combination) installed in a consumer's home. For instance, if a condenser's efficiency rating ranges from 13.0 to 14.2 SEER (depending on the coil ultimately matched with it), the rating will be 13.0 SEER for regional standards compliance, regardless of the coil with which it is ultimately installed. This recommended approach to DOE's enforcement would require revising the EnergyGuide label for central air conditioners because the current label advises installers to ensure the rating for the system they install in a consumer's home meets the DOE regional standards.

To conform the FTC label to this proposed DOE enforcement framework, the Commission proposed new labels for split-system central air conditioners that simply identify the states in which the labeled model may be installed. Specifically, the FTC proposed three types of labels for split systems. First, labels for models that may be installed anywhere (i.e., those that meet all applicable SEER and EER thresholds) would contain the statement: “Notice: Federal law allows this unit to be installed in all U.S. states and territories.” Second, labels for models that do not meet the 14.0 SEER threshold for southern states and southwestern states would contain a map identifying the states in which the unit may be legally installed. For instance, a model with a minimum rated efficiency of 13.8 SEER would contain a map indicating that that model can be legally installed only in northern states along with a statement that “Federal law prohibits installation of this unit in other states.” Finally, labels for a model with a minimum 14.0 SEER rating that does not meet EER minimum ratings for the southwest region would contain a map indicating that it can be legally installed only in northern and southern states (excluding southwestern states), as well as a statement that installation elsewhere is prohibited. These new label disclosures would simplify compliance by eliminating the need for installers to compare specific system ratings against the DOE standards.

In addition, consistent with the approach recommended by the DOE working group, the proposed label disclosed only the efficiency rating for lowest rated coil-condenser combination (e.g., 14.4 SEER) in lieu of the current label's approach, which depicts a “mini-range” of the high and low values associated with the labeled model's various certified condenser-coil combinations (e.g., 13.9-15.0 SEER). The range of ratings on the current label alerts installers and consumers that a model's compliance with regional standards could vary depending on the installed coil-condenser combination. However, given the enforcement approach developed during DOE's negotiated rulemaking, such information is no longer necessary. A single, minimum efficiency rating will provide a simpler, more direct way to communicate the model's performance. If a system, as actually installed, has a higher efficiency rating than the minimum rating displayed on the label, that installer may communicate that fact to consumers.

Rooftop Systems: The Commission also proposed amending section 305.12 to allow a single label for packaged rooftop systems, a relatively new product consisting of a combination gas furnace and air conditioner (or heat pump). The proposed label would reflect the ratings for furnace and air conditioner (or heat pump) combinations as long as the unit meets all applicable air conditioner regional standards. For models that do not meet these standards, manufacturers would have to use two labels because a single label would not have space to accommodate all necessary disclosures (e.g., the annual fuel utilization efficiency (AFUE), SEER, and regional standards map).

Manufacturer Name: In the NPRM, the Commission sought comments on the label's disclosure of the manufacturer (or private labeler) name. In 2013, the FTC amended the heating and cooling equipment labels to require the manufacturer or private labeler's name. This change occurred as part of the larger effort to create new labels consistent with new DOE regional efficiency standards. However, the Rule's current requirements for labels on refrigerators, clothes washers, and other appliances (section 305.11) continue to give manufacturers or private labelers the option to put their names on labels. To ensure the heating and cooling labels are consistent with other EnergyGuide labels, the Commission proposed to restore the option of including the manufacturer or private labeler name on the label. The Commission stated that making the manufacturer's name optional should not negatively impact consumers. For instance, consumers do not need a manufacturer or private labeler name to use the DOE database, including the cost calculator, because the model number is adequate for that purpose. In addition, because the labels are generally affixed to the products themselves or appear on Web sites describing the product, consumers are likely to already know the identity of the equipment's manufacturer or private labeler.

Model Numbers: The Commission also proposed clarifying in sections 305.12(f)(3) and (g)(3) that manufacturers or private labelers may print multiple model numbers on a single label as long as the models share the same efficiency ratings and capacities. In the original 1979 rulemaking notice, the Commission explained that manufacturers and private labelers could do so; however, associated language did not appear in the Rule itself. By ensuring that all model numbers listed in a single label share the same capacity, as well as efficiency rating, the proposed clarification would ensure all model numbers listed on a single label generate the same cost calculations when entered into the DOE online database.

Updating Retailer Disclosure Requirements (§ 305.14): The Commission also announced that it would revise the effective date for section 305.14's disclosure requirements relating to efficiency information that furnace and air conditioner installers must provide to customers. In 2013, the Commission tied the effective date for the new provision to the compliance date for DOE regional furnace standards. However, because those DOE standards were subsequently vacated, the Commission must set a new effective date. Accordingly, the Commission proposed to update that provision to clarify that the 2013 amendment now applies.

Comments: Regional Standards Information: The commenters generally supported the proposed revisions to the central air conditioner labels. AHRI explained that the state-specific information on the bottom of the proposed label is needed to clarify where a specific model may be sold. The Joint Commenters and the California IOUs emphasized that the label provides an important regional standards compliance tool. They also explained that the proposed changes accurately reflect the consensus recommendations of the DOE working group (Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC)) convened to negotiate compliance and enforcement implementation for those standards. However, in addition to generally supporting the proposed label, the commenters raised several specific issues related to the proposal, including concerns about the SEER ratings for models, comparability ranges for the label, and the timing of the revised label. We discuss these comments below.

While the commenters generally supported the proposal, they disagreed on how the label should present a model's specific SEER rating. Industry members opposed the proposal to eliminate the model-specific SEER and EER ranges (“mini-ranges”) for split-system air conditioners. For example, Goodman explained that this current information, which the Commission only recently added to the label, is essential to fully inform consumers about the range of available efficiencies. In Goodman and AHRI's view, the proposed single rating approach, which depicts the lowest efficiency rating of all certified coil-condenser combinations for the unit, would mislead some consumers who purchase systems with much higher ratings. AHRI further contended that the model-specific range information is helpful because it clearly displays comparable efficiencies and its removal would unnecessarily burden manufacturers.

The California IOUs noted that the ASRAC working group, which included industry representation, advised DOE to determine the “regional compliance based on the condenser's lowest certified rating alone, not on the system rating as installed in the home.” Thus, according to the California IOUs, the working group consensus was to disclose “only the efficiency rating for the lowest rated coil-condenser combination” and eliminate the current model-specific range.

Some commenters also suggested changing the label's comparability range for similar models on the market. AHRI, for example, requested that, for split system units covered by the range table in Appendix H, the low end of the range should be 13 SEER on labels for models allowed in northern states only, and 14 SEER for the two other label types described in the proposal. The current table has a low SEER of 13 for all units. By removing the 13 SEER from the range's lower end for products sold in southern states, the recommended change would eliminate confusion regarding the regional standards.

Finally, the commenters addressed the timing of the labeling changes for central air conditioners. Goodman urged the Commission to give manufacturers the maximum lead time possible to make the proposed changes. In its view, a longer lead time will allow industry to make the necessary changes while simultaneously conducting product redesigns to meet many new federal energy conservation standards. Specifically, Goodman asked for six months and the issuance of a pre-publication final rule to allow manufacturers to make the necessary changes.

Roof-Top Systems, Manufacturer Names on Labels, Model Numbers, and Retailer Disclosures: The commenters also addressed the Commission's proposals related to manufacturer names on the labels, model numbers, combined roof-top systems, and retailer disclosures.

First, the commenters disagreed on the proposal to give manufacturers flexibility in whether to place their name on the label. Industry members supported this proposal. The Joint Commenters, however, argued the Rule should require the label to bear the manufacturer name. In their view, the name aids consumers in their purchases because many do not see the heating and cooling equipment (and thus the unit's nameplate) until it is installed in their home. In addition, they argued that, though many retailers, installers, and assemblers deal exclusively with a single manufacturer or private labeler, that is not always the case.

Second, the commenters, such as AHRI, generally supported the proposal to allow central air conditioner manufacturers to print multiple model numbers on a single label as long as the models share the same efficiency ratings and capacities. However, the Joint Commenters urged the FTC to consider establishing a maximum limit, either on the number of different model numbers or the amount of space consumed by such numbers, to ensure the label's legibility.

Third, commenters (e.g., Goodman and AHRI) supported the proposal to allow a single label on rooftop units to reflect energy usage for furnace and ACs or HPs for single-packaged air conditioners less than 65,000 Btu/h with gas heat. No commenters opposed the proposal.

Finally, no commenters opposed the proposal to clarify the retailer disclosure provisions in § 305.14.

Discussion: Regional Standards Label for Central Air Conditioners. The Commission issues the final labels as proposed, including the three proposed label categories related to regional standards, but without the “mini-range” for split-system units. In addition, as suggested by AHRI, the final central air conditioner label has a different SEER range for products that qualify for different regions. Specifically, for products that can be sold only in northern states, the low end of the range is 13 SEER. For other products, the low end is 14 SEER. This change will minimize confusion by eliminating comparative information related to models that may not be available for sale in certain regions due to the DOE standards. The Rule requires manufacturers to begin using the revised label nine months after the Commission publishes the amendments.

Consistent with the proposal and contrary to AHRI's recommendation, the final label includes the lowest SEER rating associated with the labeled model but not the model-specific range of ratings. As noted by some commenters, this simplified disclosure is consistent with the ASRAC discussions and recommendations. In addition, in initially issuing labels related to regional standards several years ago, the Commission included the installed range for individual systems to help installers and consumers determine whether an installed system met applicable regional standards. The Commission predicated the disclosure on the assumption that the regional standards would apply to the system's installed efficiency rating. However, that assumption no longer applies because DOE plans to enforce the regional standards based on the lowest rated efficiency rating, rather than the rating of the systems as installed. Accordingly, the “mini-range” on the current label is no longer necessary. The single number will make it easier for installers to determine regional compliance. Also, with the single number, there is no risk that the label will mislead consumers into believing their installed system's efficiency is higher than it actually is. Finally, installers will have a clear incentive to inform consumers about higher efficiency combinations.

Roof-Top Systems, Manufacturer Names on Labels, Model Numbers, and Updates to Retailer Disclosures: Finally, the final amendments contain provisions related to combined roof-top systems, manufacturer names on the labels, model numbers, and retailer disclosures.

First, the final amendments allow a single label to reflect energy usage for “rooftop systems” (i.e., furnace and ACs or HPs for single-packaged air conditioners less than 65,000 Btu/h with gas heat) to reduce the burden and clutter associated with using two separate labels for these products.

Second, the amendments allow manufacturers to include their name on the label at their discretion, which is, as discussed above, consistent with labels for most other covered products. For the reasons detailed in the proposed Rule, these products are routinely sold through contractors in consumers' homes. Therefore, the absence of the manufacturer's name on the label should not confuse consumers.

Third, the final Rule allows multiple model numbers to appear on labels for models that share the same capacity and efficiency ratings. To reduce the likelihood that labels will become crowded with model numbers, the final Rule advises that numbers must be clear and prominent. The Rule has allowed multiple model numbers on appliance labels for decades with no apparent problem. Should the inclusion of multiple model numbers on labels become an issue, the Commission will consider more prescriptive requirements in the future.

Finally, the Commission has updated the retailer disclosure provisions in § 305.14 to clarify that the 2013 amendments now apply.

F. Water Heater Labels

Background: In the 2015 NPRM, the Commission sought comment on modifications to water heater labels in response to a new DOE test procedure (79 FR 40542 (July 11, 2014)). Among other things, the new DOE test creates four categories or “bins,” which group models by their “first hour rating,” DOE's standard measure of hot water output for these products. The first hour rating, which appears on current EnergyGuide labels, displays the number of gallons of hot water the heater can supply in the first hour. The four new DOE first hour rating bins are: Very small (first hour rating less than 18 gallons), low (first hour rating between 18 and 51 gallons), medium (first hour rating between 51 and 75 gallons), and high (first hour rating greater than 75 gallons). In contrast, the Rule currently groups water heater ranges by the first hour rating in roughly five-gallon increments (e.g., 25-29, 30-34, 35-39 gallons, etc.). The new test procedure also establishes a new energy efficiency metric (uniform energy factor or “UEF”).

In anticipation of these changes, the Commission proposed amendments to the water heater label ranges to provide both: (1) Tank capacity information and (2) first hour rating information consistent with the four new DOE categories. Because water heaters are commonly marketed by tank size (i.e., storage volume) and not first hour rating, the Notice asked commenters whether the Rule should group the ranges by tank size, and then further by first hour rating, placing the four DOE water usage bins within such tank size categories. In addition, the Commission proposed to use the term “hourly hot water output” instead of the more technical term “first hour rating.” The proposal also contains text explaining the term “hourly hot water output.” Under the proposal, the label would continue to display annual energy cost as the primary disclosure, with energy use appearing in the label's secondary information. The Commission did not propose to add an energy efficiency rating (i.e., energy factor) to the label.

Additionally, the Commission announced plans to update the comparability range for water heaters to reflect the new test procedure results and significant efficiency increases driven by the new DOE standards. As a result of the new DOE standards, most, if not all, electric water heaters will include heat pump technology. The Commission, therefore, proposed revising the existing water heater categories to eliminate the separate category for heat pump water heaters, and combining such models into a general category for all electric water heaters. The Commissioned expected this change would simplify the tables and help consumers compare all electric water heaters.

Comments: In general, the commenters agreed that the FTC should amend the water heater label based on significant changes to the DOE test procedure. Despite their general support for changing the label, industry members, as discussed in detail below, raised several concerns with the proposed label, including the “first hour rating” terminology, annual energy use and energy efficiency disclosures, tank size disclosures, the comparability categories, energy factor information, and timing of revised labels. In urging FTC to consider these various issues, industry members asked that the FTC reconsider the sample labels AHRI submitted with its previous comments. In their view, these labels provide clear, concise consumer information while not adversely affecting competition among water heater manufacturers. Specifically, AHRI asserted that its suggested labels clearly identify the new DOE size bins and inform consumers that the labels' comparative information applies only to water heaters within the same bin. Finally, in addition to concerns regarding the proposed label designs, the commenters raised issues about labels for electric instantaneous models and grid-enabled water heaters.

First hour rating. Several industry commenters (e.g., A.O. Smith, AHRI, and BWC) objected to the proposed label's use of the term “hourly hot water output” instead of “first hour rating.” In their opinion, this undefined term incorrectly implies that a model will deliver the indicated hot water volume on an hour-to-hour basis. The commenters explained that the first hour rating only measures the first hour's water delivery and does not necessarily apply to subsequent operating hours. Instead of creating a new term, most industry commenters recommended the Commission retain the “first hour rating” because it is a commonly accepted term employed for decades in DOE standards, on FTC labels, and in building codes and sizing guides. Some commenters offered specific alternatives. For instance, GEA suggested the term “Hot Water Output” rather than “Hourly Hot Water Output” along with a clarification that the term refers to “How much hot water you get in 1st hour.” Rheem suggested terms such as “usage category” or “hot water usage capability.” Finally, Rheem and AHRI recommended the usage category scale include not only the first hour rating category (e.g., very small, low), but also the actual rating number (e.g., 70 gallons) to provide more detailed information to help consumers pick a model that meets their hot water demands.

Annual Energy Use in Therms and Energy Factor: The commenters offered different views on including annual energy use and energy factor ratings on the label. Several industry commenters (e.g., AHRI, A.O. Smith, Rheem and BWC) recommended excluding the estimated annual energy use in therms from the label because, in their view, most consumers do not find that information useful. AHRI explained that annual energy cost and therms are proportional and that users who need such information can easily calculate “annual therms” from the annual energy cost. These commenters suggested that other disclosures would be more useful, though they did not provide examples. GEA disagreed, arguing that the label should retain the estimated annual energy use disclosure because it provides energy use information to consumers without forcing them to convert those figures from the cost disclosure.

The California IOUs, which did not address the annual energy use issue, suggested that the label display the model's efficiency rating (i.e., energy factor), in addition to its energy consumption, because it is the best indicator of a water heater's efficiency. They explained that energy factor helps consumers determine whether a model qualifies for utility rebates and serves as the applicable metric for gauging compliance with DOE standards and state building codes.

Tank Size: The commenters also took issue with including information about tank size on the proposed label. First, several commenters (e.g., AHRI and A.O. Smith) objected to the term “tank size” and urged the Commission to use the standard industry term, “storage vessel capacity,” which nationally-recognized safety standards already require on the product's rating plate. Rheem agreed that the term “tank size” should not appear on the label but, should the Commission decide to include it, suggested alternative terms such as “rated storage volume” or “rated storage capacity” to better reflect the terms used by DOE and the water heater industry.

Comparability Categories and Tank Size: Similarly, industry commenters (including A.O. Smith, AHRI, and BWC) argued the label should not divide comparability categories by storage vessel capacity. Rheem explained that first hour rating, which is a function of both volume and output, better describes the amount of hot water consumers can expect. In addition, Rheem noted that the four DOE first hour rating categories (i.e., very small, low, medium, or high) provide appropriate comparative information regardless of storage tank capacity. Accordingly, industry commenters asserted that the proposed division of categories by storage capacity is unnecessary, overly complicated, and confusing to consumers. Instead, they recommended that the comparability ranges reflect first hour rating categories only.

Combining range information for electric water heaters and heat pump water heaters: The commenters (including A.O. Smith, BWC, Rheem, AHRI, and the Joint Commenters) supported the proposal to combine the comparability range information for electric and heat pump water heaters. Rheem explained that this will allow consumers to gauge operating cost differences between the two technologies and weigh them against initial purchase prices. The Joint Commenters noted that this proposal reflects the reality that these products compete with each other for the same applications. Finally, AHRI urged the Commission to clarify that the Rule's combination of existing categories for electric water heaters and heat pumps applies only to storage water heaters.

Need For a Transitional Label: The commenters offered different views about the need for additional label information about the DOE test procedure change. GEA argued that the FTC should highlight the transition to aid consumers in their comparison shopping. It suggested using a modified label similar to the transitional labels employed for refrigerators and clothes washers during the recent DOE test procedure change for those products. AHRI and A.O. Smith disagreed, explaining that the proposed AHRI label provides adequate information regarding the transition by defining the new first hour categories (“bins”) and clearly explaining how consumers should use that information. A.O. Smith cautioned that transitional advisory language would be overly confusing and soon become unnecessary. Instead, AHRI and A.O. Smith recommended the Commission separately educate consumers on the transition between test procedures, using sources such as the FTC Web site.

Gallons per hour for instantaneous water heaters: The current instantaneous water heater label provides capacity in gallons per minute (gpm). The California IOUs recommended the instantaneous water heater label include the model's hourly hot water output, as well as the same ranges for hourly hot water output as the storage water heaters (very low, small, medium, and high) for consistency. The California IOUs argued that such a change would allow consumers to better compare the two technologies.

Timing: AHRI asserted that the information necessary to develop amended water heater labels is not yet available. In particular, AHRI explained that there is no industry data from the new test procedure to generate new comparability ranges. In addition, AHRI urged the Commission to coordinate, to the fullest extent possible, the timing of new labeling requirements with DOE's implementation of its revised test procedure. Specifically, industry members (Rheem and AHRI) urged FTC to coordinate with DOE to ensure the new label requirements coincide with the new DOE ratings. AHRI noted that industry members are not yet using the new UEF metrics from the revised test procedure to determine compliance with the minimum efficiency standards because DOE has not issued a conversion factor. The commenters suggested the Commission use the new data to determine new comparability ranges once it becomes available. AHRI indicated that the UEF implementation date has yet to be determined and will be decided with DOE's publication of the final UEF conversion factor rule.

Grid-Enabled Residential Electric Water Heaters: Commenters also requested that the Commission consider labeling for thermal storage grid-enabled residential electric water heaters. Utilities can operate these models remotely to manage overall electricity load. Rheem explained that these models, which have storage volumes greater than 75 gallons, have several unique aspects such as an activation lock and key and communications modules. In addition, Rheem explained that these models are not limited to residential use, and electronic utility companies use these models as thermal storage batteries. Given these unusual characteristics, Rheem argued that the EnergyGuide labels will not adequately compare these models to conventional models. Accordingly, it urged the Commission to exempt grid enabled water heaters from EnergyGuide labeling requirements. AHRI disagreed. It explained that DOE regulations already require a specific disclosure addressing the appropriate use of these water heaters (see 10 CFR 430.2), which could appear on the FTC EnergyGuide label, or as a separate label.

Electric instantaneous water heaters: AHRI also recommended the Commission propose labels for residential electric instantaneous water heaters, which have been excluded from the DOE test procedure in the past. The revised DOE water heater efficiency test procedure now includes a method to measure these models' energy use.

Discussion: In the final amendments, the Commission has revised the water heater label to include new information consistent with the revised DOE test procedure. Manufacturers will have nine months to begin using the label and must base the information on the new DOE test procedure. Consistent with the proposed label, the new label depicts storage water heater capacity using DOE's new output categories (or bins). The final Rule also includes new ranges for these bins derived from DOE data developed as part of its regulatory proceeding. As proposed and supported in the comments, the final Rule combines the electric water heaters and heat pump water heaters for comparison purposes.

In response to the comments, the Commission has made several revisions to the proposed label. First, the final label uses the conventional term “first hour rating” instead of “hourly hot water output.” We agree with commenters that the latter term may suggest that the rating applies on an hour-to-hour basis, when, in reality, it only measures output in the first hour. To address this issue, the final label states that “first hour rating” describes “How much hot water you get in the first hour.” Consistent with AHRI's suggestions, the model's first hour rating in gallons appears on the scale next to the model's first hour rating bin (i.e., very small, low, medium, and high) to allow for better product comparisons. Second, the label does not sort comparability ranges by tank size (i.e., storage capacity) as proposed, but instead limits those ranges to the four DOE water output bins (very small, low, medium, and high). As explained by the commenters, “first hour rating” best describes the hot water amount consumers can expect the product to deliver. Therefore, including tank size in the comparability ranges is unnecessary and potentially confusing. However, the final label includes a storage capacity disclosure near the top of the label. In response to commenters' concerns about terminology, the final label uses the term “tank size (storage capacity),” to ensure consistency with commonly used wording. Finally, the label continues to include annual energy use to provide consumers with this additional comparative information.

The final label, however, does not include several items proposed by commenters. First, it does not include text regarding the new DOE test procedure. The Commission agrees with other commenters that the final label appropriately conveys information related to the test procedure transition. Specifically, the label clearly defines the new categories (“bins”) and explains how consumers should use that information, making additional explanatory text unnecessary. Second, the label does not contain a statement explaining how the labeled model compares to the applicable DOE standard. Such information would clutter the label and be potentially confusing. Finally, the labels for instantaneous water heaters continue to convey capacity in gallons per minute. As commenters suggest, a “gallons per hour” rating on an instantaneous model may confuse or mislead consumers. Such a disclosure is not equivalent to the “first hour rating” for storage models. “Gallons per hour” represents a continuous flow rate that the model will continuously deliver, whereas “first hour rating” reflects hot water volume delivered in the first hour.

Finally, the Commission will consider seeking comment on special labeling for grid-enabled residential electric water heaters in the future. In the meantime, since grid-enabled water heaters meet existing definitions for water heaters, and the Rule contains applicable comparison ranges, manufacturers should label these models as they do any other storage water heater. The Commission will also formally propose labels for instantaneous electric-water heaters in a later notice. These products cannot be labeled under the current Rule because they do not fall into an existing labeling category, and no range of comparability exists.

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 May 31, 2017 (OMB Control No. 3084-0069). The amendments make changes in the Rule's labeling requirements that will increase the PRA burden as detailed below. Accordingly, the Commission is seeking OMB clearance specific to the Rule amendments.

Reporting Requirements (label images): The amendments require manufacturers to furnish (as part of their normal FTC reporting) links to images of their EnergyGuide labels. Given approximately 15,000 total models at an estimated 1 minute per model, this requirement will entail a burden of 250 hours. Assuming further that these reporting requirements will be implemented by data entry workers at an hourly wage rate of $15.79 per hour, the associated labor cost for reporting would be approximately $3,948 per year. Any non-labor costs associated with the reporting 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) 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 amendments will have a significant economic impact on a substantial number of small entities. The Commission recognizes that many affected entities may qualify as small businesses under the relevant thresholds. The Commission does not expect, however, that the economic impact of implementing the amendments will be significant. The Commission plans to provide businesses with ample time to implement the requirements. In addition, the Commission does not expect that the requirements specified in the final amendments will have a significant impact on affected entities.

Although the Commission certified under the RFA that the amendments would not, if promulgated, have a significant 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. Description of the Reasons That Action by the Agency Is Being Taken

The Commission initiated this rulemaking to reduce the Rule's reporting burdens, increase the availability of energy labels to consumers while minimizing burdens on industry, and generally improve existing requirements.

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. Comments that involve impacts on all entities are discussed above.

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, the standards for various affected entities are as follows: refrigerator manufacturers—up to 1,000 employees; other appliance manufacturers—up to 500 employees. Based on general knowledge of the this market, the FTC staff estimates that fewer than 50 entities subject to the Rule's requirements qualify as small businesses.

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements

The Commission recognizes that the changes will involve some burdens on affected entities. However, the amendments should not have a significant impact on a substantial number of small entities. Manufacturers will have to make changes to their reporting process. However, the Commission has provided them with ample time to incorporate the changes into their normal Web site updates. In addition, as detailed in the Paperwork Reduction Act analysis, the changes will not be significant. There should be no capital costs associated with the amendments. As estimated above, the Rule imposes new requirements on fewer than 50 small businesses (appliance and electronics manufacturers. The changes are likely to be made by data entry specialists.

E. Description of Steps Taken To Minimize Significant Economic Impact, If Any, on Small Entities, Including Alternatives

The Commission sought comment and information on the need, if any, for alternative compliance methods that would reduce the economic impact of the Rule on such small entities. In particular, the Commission sought comments on whether it should delay the Rule's effective date to provide additional time for small business compliance and whether to reduce the amount of information catalog sellers must provide. However, to minimize the impacts on manufacturers, the Commission has set the effective date for most of the new requirements at one year after publication of this document in the Federal Register and has also modified its proposal to reduce the burden associated with that reporting by providing manufacturers with different options for reporting their label images (e.g., links to pdf files, Web sites, etc.).

List of Subjects in 16 CFR Part 305

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

Final Rule

For the reasons discussed above, the Commission amends part 305 of title 16, Code of Federal Regulations, 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 (x) to read as follows:

3. Amend § 305.7 by revising paragraphs (a), (b), and (d) to read as follows:

4. In § 305.8:

a. Remove the term “at high speed” wherever it appears; and

b. Add paragraph (a)(5) to read as follows:

5. Amend § 305.11 by revising paragraphs (a) and (f) to read as follows:

6. Amend § 305.12 by revising paragraphs (f)(2) and (3), adding paragraph (f)(14), and revising paragraph (g) to read as follows:

7. Revise § 305.13(a) to read as follows:

8. Revise § 305.14 to read as follows:

9. Revise Appendixes A1 through A8 to Part 305 to read as follows:

Appendix A1 to Part 305—Refrigerators With Automatic Defrost

Appendix A2 to Part 305—Refrigerators and Refrigerator-Freezers With Manual Defrost

Appendix A3 to Part 305—Refrigerator-Freezers With Partial Automatic Defrost

Appendix A4 to Part 305—Refrigerator-Freezers With Automatic Defrost With Top-Mounted Freezer Without Through-the-Door Ice Service

Appendix A5 to Part 305—Refrigerator-Freezers With Automatic Defrost With Side-Mounted Freezer Without Through-the-Door Ice Service

Appendix A6 to Part 305—Refrigerator-Freezers With Automatic Defrost With Bottom-Mounted Freezer Without Through-the-Door Ice Service

Appendix A7 to Part 305—Refrigerator-Freezers With Automatic Defrost With Bottom-Mounted Freezer With Through-the-Door Ice Service

Appendix A8 to Part 305—Refrigerator-Freezers With Automatic Defrost With Side-Mounted Freezer With Through-the-Door Ice Service

10. Add Appendix A9 to Part 305 to read as follows:

Appendix A9 to Part 305—All Refrigerators and Refrigerator-Freezers

11. Revise Appendixes B1 through B3 to Part 305 to read as follows:

Appendix B1 to Part 305—Upright Freezers With Manual Defrost

Appendix B2 To Part 305—Upright Freezers With Automatic Defrost

Appendix B3 To Part 305—Chest Freezers And All Other Freezers

12. Appendices D1 through D4 to Part 305 are revised to read as follows:

Appendix D1 To Part 305—Water Heaters—Gas

Appendix D2 to Part 305—Water Heaters Electric

Appendix D3 to Part 305—Water Heaters—Oil

Appendix D4 to Part 305—Water Heaters—Instantaneous-Gas

13. Appendix D5 is removed.

14. Revise Appendix H to Part 305 to read as follows:

Appendix H to Part 305—Cooling Performance for Central Air Conditioners

15. Amend Appendix L to Part 305 by revising Prototype Label 1, revising Sample Label 1, removing Sample Label 1A, and revising Sample Labels 5, 7 and 17 to read as follows:

Appendix L to Part 305—Sample Labels