Rules and Regulations Under the Fur Products Labeling Act

FEDERAL TRADE COMMISSION

16 CFR Part 301

Rules and Regulations Under the Fur Products Labeling Act

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Trade Commission (Commission or FTC) has completed

its regulatory review of the Rules and Regulations under the Fur

Products Labeling Act (Fur Rules). Pursuant to that review, the

Commission concludes that the Rules continue to be valuable to both

consumers and firms. The regulatory review comments suggested various

substantive amendments to the Rules. The Commission has considered

these proposals and other proposals that it believes merit further

inquiry. The Commission seeks comment on whether it should amend the

Fur Rules to: Allow for a system of shared information for

manufacturer, importer, or other marketer identification among the

North American Free Trade Agreement (NAFTA) countries; amend Fur Rule

26 (Sec. 301.26) to specify that a Commission registered identification

number (RN) will be subject to cancellation if, after a change in the

material information contained in the RN application, a new application

that reflects current business information is not promptly submitted;

and raise from $20 to $85 or more the cost figure for fur trim and

other products exempted from the requirements of the Fur Rules.

DATES: Written comments will be accepted until January 22, 1997.

ADDRESSES: Comments should be submitted to: Office of the Secretary,

Federal Trade Commission, Room H-159, Sixth Street and Pennsylvania

Avenue, NW., Washington, DC 20580. Submissions should be marked ``Rules

and Regulations under the Fur Act, 16 CFR Part 301--Comment.'' If

possible, submit comments both in writing and on a personal computer

diskette in Word Perfect or other word processing format (to assist in

processing, please identify the format and version used). Written

comments should be submitted, when feasible and not burdensome, in five

copies.

FOR FURTHER INFORMATION CONTACT: Bret S. Smart, Program Advisor, Los

Angeles Regional Office, Federal Trade Commission, 11000 Wilshire

Blvd.,

[[Page 67749]]

Suite 13209, Los Angeles, CA 90024, (310) 235-4040.

SUPPLEMENTARY INFORMATION:

I. Background Information

The Fur Products Labeling Act (Fur Act), 15 U.S.C. 69, requires

marketers of covered fur products to mark each product to show (1) the

name(s) of the animal(s) that produced the fur(s); (2) that the fur

product contains or is composed of used fur, when such is the fact; (3)

that the fur product contains or is composed of bleached, dyed, or

otherwise artificially colored fur, when such is the fact; (4) that the

fur product is composed in whole or in substantial part of paws, tails,

bellies, or waste fur, when such is the fact; (5) the name under which

the manufacturer or other responsible company does business, or in lieu

thereof, the RN issued to the company by the Commission; and (6) the

name of the country of origin of any imported furs used in the fur

product. The Fur Act also contains advertising and recordkeeping

provisions. Pursuant to Section 8(b) of the Fur Act, 15 U.S.C. 69f(b),

``[t]he Commission is authorized and directed to prescribe rules and

regulations governing the manner and form of disclosing information

required by this Act, and such further rules and regulations as may be

necessary and proper for purposes of administration and enforcement of

this Act.'' The Commission has issued implementing regulations, the Fur

Rules, which are set forth at 16 CFR part 301.

As part of the Commission's on-going regulatory review of all its

rules, regulations, and guides, on May 6, 1994, the Commission

published a Federal Register notice (FRN), 59 FR 23645, seeking public

comment on the Fur Rules. The FRN solicited comments about the overall

costs and benefits of the Fur Rules and their regulatory and economic

impact. The FRN also sought comment on what changes in the Fur Rules

would increase the benefits of the Fur Rules to purchasers and how

those changes would affect the costs the Rules impose on firms subject

to their requirements. The Commission further stated that Sections 19

and 27 would be amended to comply with ``metrication'' mandates if the

Commission decided to retain those rules in their current form after

the regulatory review. Finally, the FRN stated that, should Section 43

be retained, certain language therein would be modified to conform with

that set forth in Cliffdale Associates, Inc., 103 F.T.C. 110, 164-65

(1984) and subsequent cases.1 The deadline for submission of

comments was extended twice, on July 7, 1994 and September 12, 1994.

The final deadline for comments was October 15, 1994.

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\1\ The regulatory review comments are silent as to the proposed

``metrication'' changes to Sections 19 and 27, and the addition of

the language from the Cliffdale Associates, Inc. matter to Section

43, and the Commission does not propose any substantive changes to

these Sections. The Commission has decided to retain these Sections

in their present form. Therefore, in a separate notice, the

Commission announces the final amendments to Sections 19 and 27 to

include metric equivalents beside the inch/pound unit measurements

in those Sections, as required by Executive Order 12770 of July 25,

1991 (56 FR 35801, July 29, 1991) and the Metric Conversion Act, as

amended by the Omnibus Trade and Competitiveness Act (15 U.S.C.

205b). The same notice states that Section 43 will be amended to

reflect language consistent with that set forth in Cliffdale

Associates, Inc., 103 F.T.C. 110, 164-65 (1984) and subsequent

cases.

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II. Regulatory Review Questions and Comments

The Commission received seven comments in response to the

FRN.2 Five comments expressed general support for retaining the

collective Textile Rules (16 CFR 303), Wool Rules (16 CFR 300) and Fur

Rules.3 One comment from a trade association of companies covered

by the Fur Rules' marking requirements stated: ``we feel that it would

be in the best interest of the fur industry to remain under the present

rules.'' 4

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\2\ Dan River Inc. [DR] (1), People for the Ethical Treatment of

Animals [PETA] (2), Fieldcrest Cannon, Inc. [FIELD] (3), American

Textile Manufacturers Institute [AMTI] (4), Fruit of the Loom

[FRUIT] (5), Seattle Fur Exchange [SFE] (6), and Milliken & Company

[MILL] (7). The number in parentheses denotes the number assigned by

the Office of the Secretary to the comment in the public record of

comments received in the regulatory review of the Fur Rules.

\3\ DR (1), FIELD (3), ATMI (4), FRUIT (5), and MILL (7). The

regulatory reviews of the Textile Rules, the Wool Rules, and the Fur

Rules were undertaken simultaneously. In each case, these five Fur

Rules comments are identical copies of submissions that were made

under both the Textile Rules and the Wool Rules. The comments are

primarily responsive to Textile Rules and Wool Rules issues and only

minimally relevant to Fur Rules issues. Nevertheless, the five

comments express general support for all three of the Commission's

implementing Rules.

\4\ SFE (6) p.1.

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The comments submitted in response to the regulatory review of the

Fur Rules propose certain amendments. Based on the comments and other

available information, the Commission has considered proposals to amend

the Rules to: (a) Require additional disclosures and record keeping

relating to the number of furs used in a fur product and the manner in

which animals producing the furs died; (b) allow for a system of shared

information for manufacturer, importer, or other responsible company

identification among the NAFTA countries; (c) add a provision to

Section 26 specifying that a Commission RN will be subject to

cancellation if, after a change in the material information contained

in the RN application, a new application that reflects current business

information is not promptly submitted; and (d) raise from $20 to $85 or

more the cost figure for fur trim and other products exempted from the

requirements of the Fur Rules.

Although no comments were received from consumers or consumer

groups, the Commission believes that consumers benefit directly from

the Fur Rules and consider the mandated disclosures material in making

purchase decisions. Companies at all levels of manufacture,

distribution, and sales of fur products support and accept these

regulations. Thus, the Commission has determined that it will retain

the Fur Rules. However, the Commission has decided to seek additional

comment on possible amendments to the Rules.

After reviewing specific recommendations, the Commission is

considering some of the suggested changes, as well as other possible

amendments. The Commission has, however, rejected other changes to the

Fur Rules proposed in the comments as infeasible or unnecessary. This

Notice of Proposed Rulemaking (NPR) seeks comment concerning several

proposed changes to the Fur Rules. All of the recommendations for

change are discussed below.

III. Proposals for Amendments to the Fur Rules

This section discusses specific recommendations and proposed

changes received in response to the Commission's solicitation of

comment in the FRN and additional issues raised by the comments or the

Commission. The discussion includes a summary and analysis of the

comments and explanation of the changes proposed by the Commission.

A. Disclose the Number of Furs Used in a Fur Product and the Manner in

Which Animals Producing the Furs Died

One commenter 5 recommended that the Fur Rules be amended by

requiring covered companies to provide additional disclosures and keep

additional records relating to the number of animals used in a fur

product and the manner in which the animals producing the furs died.

The Commission does not propose to amend the Fur Rules in this manner,

as such proposed regulations do not relate to the ``manner and form of

disclosing information required by [the Fur] Act,'' nor are they

``necessary and proper for

[[Page 67750]]

purposes of administration and enforcement of [the Fur] Act'' within

the meaning of Section 8(b) of the Fur Act.

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5 PETA (1) pp.1-5.

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B. System of Shared Information for Manufacturer or Other Responsible

Company Identification Among the NAFTA Countries

Under the Fur Act, the Wool Products Labeling Act,6 and the

Textile Fiber Products Identification Act,7 the required label on

covered products must bear the identification of one or more companies

responsible for the manufacture, importation, offering for sale, or

other handling of the product, either by the full name under which the

company does business or, in lieu thereof, by the RN issued by the

Commission.8 Canada has a similar system of identification numbers

known as CA numbers. Mexico does not have a similar system, but the

Mexican government issues tax identification numbers to companies.

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\6\ 15 U.S.C. 68.

\7\ 15 U.S.C. 70.

\8\ Section 4(2)(E) of the Fur Act, 15 U.S.C. 69b(2)(E),

requires disclosure of: ``the name, or other identification issued

and registered by the Commission, of one or more of the persons who

manufacture such fur product for introduction into commerce,

introduce it into commerce, sell it in commerce, advertise or offer

it for sale in commerce, or transport or distribute it in

commerce.''

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To eliminate the need for a company to register in more than one

country, the comments received recommend that the FTC and appropriate

government agencies in the NAFTA countries develop an integrated system

by allowing any RN, CA, or Mexican tax identification number to suffice

as legal company identification in all three NAFTA countries.9 The

comments state that it would not be necessary to create one

identification number system. They recommend that each NAFTA country

continue its policy and procedure of registration, with the U.S.

continuing the present system of RN numbers. The countries could then

exchange information on computer databases so that a covered product

can be traced to a manufacturer or other responsible party using either

an RN number, a CA number, or a Mexican tax number. Such a system would

facilitate use of a single label for fur goods shipped to NAFTA

countries.

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\9\ DR (1) p.1., FIELD (3) pp.2-3, ATMI (4) p.2, FRUIT (5) p.5,

MILL (7) p.3. Moreover, numerous comments of this nature are

contained in the responses received in the regulatory reviews of the

Textile Rules and the Wool Rules. Although the focus of the Fur Act

is significantly different from that of the Textile Act and the Wool

Act, all three contain provisions relating to establishment of the

RN system. Both the Textile Rules and the Wool Rules contain

parallel provisions to Fur Rule 26(c), which states that:

Registered identification numbers assigned under this rule may

be used on labels required in labeling products subject to the

provisions of the Wool Products Labeling Act and the Textile Fiber

Products Identification Act, and numbers previously assigned or to

be assigned by the Commission under such Acts may be used as and for

the required name in labeling under this Act. When so used by the

person or firm to whom assigned, the use of the numbers shall be

construed as identifying and binding the applicant as fully and in

all respects as though assigned under the specific Act for which it

is used.

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Congress would have to amend the Fur Act to allow CA numbers and

Mexican tax numbers, which are not registered by the Commission, to be

used on fur products shipped for distribution in the United States. For

present purposes, the Commission seeks comment on the advantages and

disadvantages of a system of shared information, the feasibility of

implementing such a system across borders, and the impact such a system

might have on the ability of the Commission, consumers, and firms to

track responsible parties. Alternatively, the Commission might consider

whether simply to permit the use of the identification numbers of a

NAFTA trading partner, provided that the partner made the identifying

information readily available to anyone seeking it. The Commission

seeks comment on the advantages and disadvantages of this alternative,

which also would require statutory amendment.

C. Require Holders of RN Numbers To Update Their Registration

Information When Changes in That Information Occur

The success of a system of shared information among NAFTA countries

depends to a great extent on the availability and the quality of the

information in the Commission's RN registry and the registration

systems of Canada and Mexico. To increase the usefulness of the RN

registry, the Commission plans to improve its accuracy and the ease of

access to its contents.

Since initially being issued RNs, many companies have changed their

legal business name, business address, and/or company type (e.g., from

proprietorship to corporation) without notifying the FTC about the

change(s), as required by Section 26(b)(2) and as requested on the RN

application form currently used by the Commission for RN requests

relating to either the Textile, Wool or Fur Rules. Additionally, many

RN holders have gone out of existence, and others, while still in

existence, no longer have any need for their RNs. As a result, a large

percentage of the official FTC records do not reflect an actual user's

current name, place of business, and/or company type.

Registered identification numbers are subject to cancellation

whenever any such number was procured or has been used improperly or

contrary to the requirements of the Fur Act and Regulations, or when

otherwise deemed necessary in the public interest. The Commission

proposes to add a provision to the Fur Rules that would subject an RN

number to cancellation if, after a change in the material information

contained in the RN application, a new application is not promptly

submitted to the Commission. Section 301.26(b)(2) of the Rules already

requires that changes in name, business address, or legal business

status of RN holders be reported promptly to the Commission. The

proposed amendment is merely an added provision to enable the

Commission to update its database.10 The Commission plans to

undertake a program to update the RN database, in stages over a period

of time. Commission staff will make every reasonable effort to identify

and locate all companies actually using an RN and make them aware of

their obligations to update their applications before a specified

deadline. Numbers assigned to companies that are no longer in business,

or that cannot be located, would then be subject to revocation.

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\10\ It also complements the Commission's Rules of Practice,

which state: ``Numbers are subject to revocation for cause or upon a

change in business status or discontinuance of business.'' 16 CFR

1.32.

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The Commission seeks comment on the proposal to revise Section

26(b)(2) to read as follows:

Sec. 301.26 Registered Identification Number.

(a) * * *

(b)(1) * * *

(2) Registered identification numbers will be subject to

cancellation if the Federal Trade Commission fails to receive prompt

notification of any change in name, business address, or legal

business status of a person or concern to whom a registered

identification number has been assigned by application duly executed

in the form set out in subsection (d) of this section, reflecting

the current name, business address, and legal business status of the

person or concern.

* * * * *

D. Increase the Cost Figure Below Which Fur Items Will Be Exempt From

the Requirements of the Fur Rules

Under Section 39 of the Fur Rules, fur trim or other fur items for

which the cost to the manufacturer, or the manufacturer's selling

price, does not exceed $20 are exempt from some of the requirements of

the Fur Act and Rules. This amount was last adjusted for

[[Page 67751]]

inflation in 1969. Adjusting it for inflation that has occurred since

1969 would raise the amount to $85. The Commission seeks comment on

whether $85 is an appropriate amount for the exemption, or whether it

should be a higher figure such as $100.

IV. Invitation to Comment and Questions for Comment

A. Invitation

Members of the public are invited to comment on any issues or

concerns they believe are relevant or appropriate to the Commission's

consideration of the proposed amendment to the Fur Rules. The

Commission requests that factual data upon which the comments are based

be submitted with the comments. In addition to the issues raised above,

the Commission solicits public comment on the specific questions

identified below. These questions are designed to assist the public and

should not be construed as a limitation on the issues on which public

comment may be submitted.

B. Questions

Identification Numbers of Manufacturers or Other Responsible Parties

1. If it were consistent with the Fur Act to do so, should the

Commission amend the Fur Rules to allow the interchangeable use of RN,

CA, or Mexican tax numbers?

a. What would be the advantages and disadvantages of a system of

shared information? Alternatively, what would be the advantages and

disadvantages of a system whereby one NAFTA country recognized and

allowed the identification numbers of another NAFTA country, provided

that the information would be made easily accessible to those seeking

it?

b. Would the implementation of a system of shared information

across national borders be feasible?

c. What impact would a system of shared information have on the

ability of consumers and businesses to track responsible parties?

d. What benefits and costs to consumers and businesses would result

from such an amendment? Would such an amendment have a significant

economic impact on a substantial number of small business entities?

Explain the nature and amount of such impact.

2. Is the proposed amendment to Fur Rule 26(b)--enabling the

Commission to cancel an RN where the information contained on the

original application is not properly updated--reasonable and

appropriate? Are there other alternatives that would enable the

Commission to maintain an accurate data base?

Dollar Amount for Exemption for Fur Trim

3. Should the Commission raise the cost figure for exemption from

some of the requirements of the Fur Rules from $20 to $85? Should the

amount be raised higher to account for some future inflation between

1996 and the time the Fur Rules are again subject to regulatory review?

Would $100 be an appropriate amount for this exemption?

V. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601-12, requires

that the agency conduct an analysis of the anticipated impact of the

proposed amendments on small businesses.11 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. However, 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.

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\11\ The RFA addresses the impact of rules on ``small

entities,'' defined as ``small businesses,'' ``small governmental

entities,'' and ``small [not-for-profit] organizations,'' 5 U.S.C.

601. The Fur Rules do not apply to the latter two types of entities.

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Because the Fur Act, and the Fur Rules issued thereunder, cover the

manufacture, sale, offering for sale, advertising, and distribution of

fur products, the Commission believes that any amendments to the Fur

Rules may affect a substantial number of small businesses. Unpublished

data prepared by the U.S. Census Bureau under contract to the Small

Business Administration (SBA) show that there are some 181

establishments manufacturing fur goods (SIC code 2371), all of which

qualify as small businesses under applicable SBA size standards.12

Other small businesses are likely involved in the distribution and sale

of products subject to the Fur Rules.

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\12\ SBA's revised small business size standards are published

at 61 FR 3280 (January 31, 1996).

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However, the proposed amendments apparently would not have a

significant economic impact upon such entities. Comments received

during the regulatory review of the Fur Rules indicated that the costs

of complying with the Rules and the Fur Act are not substantial. The

proposed amendments should clarify existing requirements of the Fur

Rules and reduce further the costs of compliance with Fur Act

requirements.

The Commission proposes to amend Section 26 of the Fur Rules--

governing the issuance of an RN number--to clarify that such numbers

are subject to cancellation if changes in the information provided in

the original application for the number are not reported to the

Commission as required by Section 26(b)(2). This amendment does not

impose any new requirement upon businesses. Furthermore, while

Commission cancellation of an identification number would require a

business to re-apply, this may be done simply by submitting the

identifying information already called for in the Rules. Therefore,

amending the Rules as proposed will not impose any significant economic

costs on members of the industry.

The proposed amendment raising the cost figure for fur trim that is

exempted from some of the provisions of the Fur Rules likewise does not

impose any new requirement on businesses. In fact, it is an

inflationary adjustment that will slightly reduce compliance burdens

and costs. The change, while likely important to some firms, is not

expected to have a significant impact on the fur industry.

On the basis of available information, the Commission certifies

that amending the Fur Rules as proposed will not have a significant

economic impact on a substantial number of small businesses. To ensure

that no significant economic impact is being overlooked, however, the

Commission requests comments on this issue. The Commission also seeks

comments on possible alternatives to the proposed amendments to

accomplish the stated objectives within the statutory framework. After

reviewing any comments received, the Commission will determine whether

a final regulatory flexibility analysis is appropriate.

VI. Paperwork Reduction Act

The Fur Rules contain various information collection requirements

for which the Commission has obtained clearance under the Paperwork

Reduction Act (PRA), 44 U.S.C. 3501 et. seq., Office of Management and

Budget (OMB) Control Number 3084-0099. These requirements relate to the

accurate disclosure of material information about fur content and

products, and requirements for manufacturers and dealers to retain

records to support claims made on labels and advertisements. Most of

these requirements are specifically mandated by the Fur Act. See e.g.,

15 U.S.C. 69b, 69e. The Commission has also obtained

[[Page 67752]]

OMB clearance for petitions for an exemption under the Fur Act, even

though it has received no such petitions over the past decade. A Notice

soliciting public comments on extending these clearances through

December 31, 1999, was recently published in the Federal Register. 61

FR 43764 (August 26, 1996).

The Commission's current proposal regarding cancellation of RN

numbers, discussed in detail above, would not impose an additional

``burden'' on current and/or future holders of Registered

Identification Numbers. This is because the Fur Rules at 16 CFR

301.26(b)(2) already require companies to notify the FTC about changes

in business names, addresses, company type, etc. The current proposal

merely adds the element of cancellation by the Commission if these

requirements are not met. Neither the initial filing procedures nor the

requirement to update the information are new and therefore, no

additional ``burden'' is imposed.

More importantly, the underlying certification itself does not meet

the definition of ``information'' contained in the PRA. In implementing

the Paperwork Reduction Act of 1995, OMB attempted to clarify the

exemption for ``certifications'' in Section 1320.3(h) (1)-(10) in both

the Notice of Proposed Rulemaking, 60 FR 30438, 30439 (June 8, 1995)

and the Final Rule, 61 FR 44978, 44979 (August 9, 1995) (``the

exemption applies when the certification is used to identify an

individual in a 'routine, non-intrusive, non-burdensome way.' '') This

language reflects current guidance in OMB/OIRA's Information Collection

Review Handbook (1989), which discusses exempt categories of inquiry (5

CFR 1320.3(h) (1)-(10)) that are not deemed to constitute

``information.'' Certifications, as well as other forms of

acknowledgments, comprise one of these categories.13 Such

inquiries are considered to be routine because response to the requests

rarely requires examination of records, usually does not require

consideration about the correct answer, and usually is provided on a

form supplied by the government. See OMB/OIRA Handbook, p. 29.

Accordingly, OMB's regulations exempt certifications from the clearance

requirement, provided that no information need be reported beyond

certain basic identifying information.

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\13\ Specifically, the first category consists of: ``affidavits,

oaths, affirmations, certifications, receipts, changes of address,

consents, or acknowledgments.'' 5 CFR 1320(h)(1).

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VII. Additional Information for Interested Persons

A. Motions or Petitions

Any motions or petitions in connection with this proceeding must be

filed with the Secretary of the Commission.

B. Communications by Outside Parties to Commissioners or their Advisors

Pursuant to Sec. 1.18(c) of the Commission Rules of Practice, 16

CFR 1.18(c), communications with respect to the merits of this

proceeding from any outside party to any Commissioner or Commissioner's

advisor during the course of this rulemaking shall be subject to the

following treatment. Written communications, including written

communications from members of Congress, shall be forwarded promptly to

the Secretary for placement on the public record. Oral communications,

not including oral communications from members of Congress, are

permitted only when such oral communications are transcribed verbatim

or summarized at the discretion of the Commissioner or Commissioner's

advisor to whom such oral communications are made, and are promptly

placed on the public record, together with any written communications

relating to such oral communications. Memoranda prepared by a

Commissioner or Commissioner's advisor setting forth the contents of

any oral communications from members of Congress shall be placed

promptly on the public record. If the communication with a member of

Congress is transcribed verbatim or summarized, the transcript or

summary will be placed promptly on the public record.

List of Subjects in 16 CFR Part 301

Furs Labeling, Trade practices.

Authority: 15 U.S.C. 69.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 96-32261 Filed 12-23-96; 8:45 am]

BILLING CODE 6750-01-P