Trade Regulation Rule on Misbranding and Deception as to Leather Content of Waist Belts

FEDERAL TRADE COMMISSION

16 CFR Part 405

Trade Regulation Rule on Misbranding and Deception as to Leather

Content of Waist Belts

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Trade Commission (``Commission'') announces the

commencement of a rulemaking proceeding for the trade regulation rule

on Misbranding and Deception as to Leather Content of Waist Belts

(``Leather Belt Rule'' or ``Rule''). The proceeding will address

whether or not the Leather Belt Rule should be repealed. The Commission

invites interested parties to submit written data, views, and arguments

on how the Rule has affected consumers, businesses and others, and on

whether there currently is a need for the Rule. This document includes

a description of the procedures to be followed, an invitation to submit

written comments, a list of questions and issues upon which the

Commission particularly desires comments, and instructions for

prospective witnesses and other interested persons who desire to

participate in the proceeding.

DATES: Written comments must be submitted on or before April 4, 1996.

Notifications of interest in testifying must be submitted on or

before April 4, 1996. If interested parties request the opportunity to

present testimony, the Commission will publish a document in the

Federal Register stating the time and place at which the hearings will

be held and describing the procedures that will be followed in

conducting the hearings. In addition to submitting a request to

testify, interested parties who wish to present testimony must submit,

on or before April 4, 1996, a written comment or statement that

describes the issues on which the party wishes to testify and the

nature of the testimony to be given.

ADDRESSES: Written comments and requests to testify should be submitted

to Office of the Secretary, Federal Trade Commission, Room H-159, Sixth

Street and Pennsylvania Avenue, NW., Washington, DC 20580, telephone

number (202) 326-2506. Comments and requests to testify should be

identified at ``16 CFR Part 405--Comment--Leather Belt Rule'' and ``16

CFR Part 405--Request to Testify--Leather Belt Rule,'' respectively. 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:

Lemuel Dowdy or Edwin Rodriguez, Attorneys, Federal Trade Commission,

Division of Enforcement, Bureau of Consumer Protection, Sixth Street

and Pennsylvania Avenue, NW., Washington, DC 20580, (202) 326-2981 or

(202) 326-3147.

SUPPLEMENTARY INFORMATION:

I. Introduction

Pursuant to the Federal Trade Commission Act (``FTC Act''), 15

U.S.C. 41-58, and the Administrative Procedure Act, 5 U.S.C. 551-59,

701-06, by this Notice of Proposed Rulemaking (``NPR'') the Commission

initiates a proceeding to consider whether the Leather Belt Rule should

be repealed or remain in effect.\1\ The Commission is undertaking this

rulemaking proceeding as part of the Commission's ongoing program of

evaluating trade regulation rules and industry guides to determine

their effectiveness, impact, cost and need. This proceeding also

responds to President Clinton's National Regulatory Reinvention

Initiative, which, among other things, urges agencies to eliminate

obsolete or unnecessary regulations.

\1\ In accordance with section 18 of the FTC Act, 15 U.S.C. 57a,

the Commission submitted this NPR to the Chairman of the Committee

on Commerce, Science, and Transportation, United States Senate, and

the Chairman of the Subcommittee on Commerce, Trade and Hazardous

Materials, United States House of Representatives, 30 days prior to

its publication in the Federal Register.

---------------------------------------------------------------------------

II. Background Information

The Leather Belt Rule was promulgated on June 27, 1964, to remedy

deceptive practices involving misrepresentations about the leather

content of waist belts that are not offered for sale as part of a

garment. The Rule prohibits representations that belts not made from

the hide or skin of an animal are made of leather or that belts are

made of a specified animal hide or skin when such is not the case. In

addition, the Rule requires that belts

[[Page 8500]]

made of split leather, and ground, pulverized or shredded leather bear

a label or tag disclosing the kind of leather of which the belt is

composed. The Rule also requires that non-leather belts having the

appearance of leather bear a tag or label disclosing their composition

or disclosing that they are not leather.

As part of its continuing review of its trade regulation rules to

determine their current effectiveness and impact, the Commission

published a Federal Register notice \2\ on March 27, 1995,\3\ asking

questions about the benefits and burdens of the Rule to consumers and

industry. The request for comments elicited ten comments.\4\ Six

comments were from consumers \5\ and four from leather or leather goods

manufacturers.\6\

\2\ 60 FR 15725. The Commission's Office of the Secretary has

assigned document number B172445 to this notice. All comments

submitted in response to this notice are sequentially numbered and

filed under number B172445 in the public record, starting with

number B17244500001. Any request for copies or inspection of the

comments to this notice should refer to document number B172445.

\3\ On the same date, the Commission published a Federal

Register notice soliciting comment on its Industry Guides for

luggage, shoes, and Ladies' handbags. 60 FR 15724. See Guides for

the Luggage and Related Products Industry, 16 CFR Part 24; Guides

for Shoe Content Labeling and Advertising, 16 CFR Part 231; and

Guides for the ladies' Handbag Industry, 16 CFR Part 247.

\4\ For purposes of this NPR, we cite these ten comments using

the name of the commenter and the sequential number of the comment

in parentheses, without repeating the B172445 prefix.

\5\ The following is a list of the consumer commenters: Stephen

Toso (1), Ross E. Kettering (2), Matt Anderson (3), Marilyn Raeth

(4), James A. McGarry (5), and Lenna Mae Gara (8).

\6\ The following is a list of comments received from industry

members: Enger Kress Company (manufactures mens and ladies wallets

and occasionally leather belts) (6), Cromwell leather Company, Inc.

(produces leather that is sold to producers of finished leather

goods) (7), Humphreys, Inc. (manufacturer of leather belts) (9), and

Leather Industries of America, Inc. (trade association representing

the leather tanning industry) (10).

---------------------------------------------------------------------------

The consumer comments expressed continuing support for the Rule,

contending that its disclosure requirements help consumers make

informed purchasing decisions. One industry comment supported the Rule

for the same reason.\7\ These commenters stated that the Rule helps

consumers identify belts made of different types of cowhide leather,

such as top grain leather, and split leather.\8\ In addition, the

comments stated that the disclosures required by the Rule allow

consumers to identify belts made of vinyl, plastic, polyurethane, paper

and other synthetic materials that can be made to look like leather.\9\

The consumer commenters stated that, without the required disclosures,

consumers cannot be certain of the quality of the leather used in

belts, or that belts are made of leather at all.\10\

\7\ Enger Kress (6).

\8\ Toso (1), Kettering (2), Anderson (3), Raeth (4), McGarry

(5), and Gara (6).

\9\ Toso (1) states that the use in belts of synthetic materials

that look like leather makes it difficult to determine the true

leather content of belts. The comment gives as an example the use of

``P.U. Glove Leather'' where the ``P.U.'' stands for polyurethane.

Kettering (2) also opposes rescinding the Leather Belt Rule because

of the difficulty consumers face in identifying belts that are made

of real leather when manufacturers try to pass off vinyl or other

materials as leather; the comment states that the Rule's disclosures

allow consumers to make informed choices by identifying the leather

contents of belts. Anderson (3), p.2.

\10\ Toso (1) states that the discount stores are growing and

that they will be tempted to deceive consumers by claiming that

belts are made a higher quality leather than they actually are.

Raeth (4) expresses the concern that manufacturers may pass off

cheaper, inferior goods to consumers if the Rule is eliminated.

---------------------------------------------------------------------------

Three comments recommended that the Commission amend the Rule to

allow the use of the term ``bonded leather'' when a leather good is

made of ground, pulverized, or shredded leather that is bonded with an

adhesive.\11\ Seven comments supported the continuation of the Leather

Belt Rule as it currently exists.\12\ Two comments from industry

members expressed support for consolidating the Rule and the Guides

into one set of guidelines that apply to all finished leather

goods.\13\

\11\ Cromwell (7), Humphreys (9), and Leather Industries (10).

These commenters recommend that the Rule include a prohibition on

the use of the term ``bonded leather'' unless at least 75% of the

fibers in the product are leather. This issue has been addressed in

the proposed Guides, which allow the use of the term ``bonded

leather'' if certain required disclosures are made.

\12\ Toso (1), Kettering (2), Anderson (3), Raeth (4), McGarry

(5), Enger Kress (6), and Gara (8).

\13\ Cromwell (7) and Leather Industries (10).

---------------------------------------------------------------------------

On September 18, 1995, the Commission announced that, to eliminate

unnecessary duplication, it had rescinded the three separate guides for

various leather products \14\ and sought comment on one set of

proposed, consolidated guidelines: the Guides for Select Leather and

Imitation Leather Products. \15\ Because the proposed Guides would

cover belts, the Commission published, on the same day, an Advance

Notice of Proposed Rulemaking (``ANPR'') stating that it had

tentatively determined that a separate Leather Belt Rule is no longer

necessary, and seeking comments on the proposed repeal of the Rule.\16\

In accordance with section 18 of the FTC Act, 14 U.S.C. 57a, the ANPR

was sent to the Chairman of the Committee on Commerce, Science, and

Transportation, United States Senate, and the Chairman of the

Subcommittee on Commerce, Trade and Hazardous Materials, United States

House of Representatives.

\14\ 60 FR 48027.

\15\ 60 FR 48056. In particular the Commission sought comment as

to whether the consolidated Guides should cover leather, or

imitation leather, products in addition to shoes, luggage, handbags,

and belts. The deadline for comment on the proposed Guides was

October 18, 1995, but it was subsequently extended until November

15, 1995. 60 FR 54316 (Oct. 23, 1995).

\16\ 60 FR 48070. The Commission's Office of the Secretary has

assigned document number B183789 to the ANPR. All comments submitted

in response to the ANPR are sequentially numbered and filed under

document number B183789 in the public record, starting with number

B18378900001. The comments submitted in response to the ANPR are

identified in this NPR by the name of the commenter and the

sequential number, without repeating the document number.

---------------------------------------------------------------------------

The ANPR comment period closed on October 18, 1995. The Commission

received two comments in response to the ANPR.\17\ One of these

comments supports retention of the existing Leather Belt Rule. The

commenter believes that rescission of the Rule may decrease the

accuracy of the labeling of waist belts, making the selection and

purchase of belts more difficult for consumers.\18\ The other comment

supports consolidating the Rule into one set of guidelines governing

disclosures of the leather content of leather goods, and recommends

that the term ``bonded leather'' be allowed by those guidelines.\19\

\17\ The comments were submitted by Larry E. Gundersen (1), a

consumer, and Humphreys Inc. (2), a manufacturer of leather belts.

\18\ Gundersen (1).

\19\ Humphreys Inc. (2). See footnote 11 above regarding the

term ``bonded leather.''

---------------------------------------------------------------------------

After reviewing the comments submitted, the Commission has

determined that the benefits of the Rule are retained through the

inclusion of belts in the proposed Guides for Select Leather and

Imitation Leather Products. While repealing the Rule would eliminate

the Commission's ability to obtain civil penalties for any future

misrepresentations of the leather content of belts, the Commission has

determined that it would not seriously jeopardize the Commission's

ability to act effectively. Any significant problems that might arise

could be addressed on a case-by-case basis, administratively under

Section 5 of the FTC Act, 15 U.S.C. 45, or through court actions under

Section 13(b), 15 U.S.C. 53(b), in federal district court. Prosecuting

serious or knowing misrepresentations in district court allows the

Commission to seek injunctive relief as well as equitable remedies,

such as redress or disgorgement.

The Commission believes that the proposed Guides serve the public

[[Page 8501]]

interest better than maintaining a Rule for leather belts and separate

Guides for various other leather products. Accordingly, the Commission

has determined that a separate Leather Belt Rule is not necessary. The

Commission therefore seeks comments on the proposed repeal of the

Leather Belt Rule.

III. Rulemaking Procedures

The Commission finds that the public interest will be served by

using expedited procedures in this proceeding. First, there do not

appear to be any material issues of disputed fact to resolve in

determining whether to repeal the Rule. Second, the use of expedited

procedures will support the Commission's goal of eliminating obsolete

or unnecessary regulations without an undue expenditure of resources,

while ensuring that the public has an opportunity to submit data, views

and arguments on whether the Commission should repeal the Rule.

The Commission, therefore, has determined, pursuant to 16 CFR 1.20,

to use the procedures set forth in this notice. These procedures

include: (1) Publishing this Notice of Proposed Rulemaking; (2)

soliciting written comments on the Commission's proposal to repeal the

Rule; (3) holding an informal hearing, if requested by interested

parties; (4) obtaining a final recommendation from staff; and (5)

announcing final Commission action in a notice published in the Federal

Register.

IV. Invitation To Comment and Questions for Comment

Interested persons are requested to submit written data, views or

arguments on any issue of fact, law or policy they believe may be

relevant to the Commission's decision on whether to repeal the Rule.

The Commission requests that commenters provide representative factual

data in support of their comments. Individual firms' experiences are

relevant to the extent they typify industry experience in general or

the experience of similar-sized firms. Commenters opposing the proposed

repeal of the Rule should explain the reasons they believe the rule is

still needed and, if appropriate, suggest specific alternatives.

Proposals for alternative requirements should include reasons and data

that indicate why the alternatives would better protect consumers from

unfair or deceptive acts or practices under section 5 of the FTC Act,

15 U.S.C. 45.

Although the Commission welcomes comments on any aspect of the

proposed repeal of the Rule, the Commission is particularly interested

in comments on questions and issues raised in this Notice. All written

comments should state clearly the question or issue that the commenter

is addressing.

Before taking final action, the Commission will consider all

written comments timely submitted to the Secretary of the Commission

and testimony given on the record at any hearings scheduled in response

to requests to testify. Written comments submitted will be available

for public inspection in accordance with the Freedom of Information

Act, 5 U.S.C. 552, and Commission regulations, on normal business days

between the hours of 8:30 a.m. to 5:00 p.m. at the Federal Trade

Commission, Public Reference Room, Room H-130, Federal Trade

Commission, Sixth Street and Pennsylvania Avenue, N.W., Washington, DC

20580, telephone number (202) 326-2222.

Questions

(1) Is the misrepresentation of the leather contents of belts by

manufacturers and distributors of belts still a significant problem in

the marketplace?

(2) What benefits do consumers derive from the Rule?

(3) Should the Rule be kept in effect or should it be repealed?

(4) How would repealing the Rule affect the benefits experienced by

consumers?

(5) How would repealing the Rule affect the benefits and burdens

experienced by firms subject to the Rule's requirements?

(6) Are there any other federal or state laws or regulations, or

private industry standards, that eliminate the need for the Rule?

(7) Are the proposed Guides for Select Leather and Imitation

Leather Products likely to provide all or most of the benefits now

provided by the Rule?

(8) How, if at all, would repeal of the Rule, and the resulting

elimination of civil penalty enforcement actions now available to

enforce it, likely affect the accuracy of the advertising, labeling, or

marketing of leather belts?

V. Requests for Public Hearings

Because there does not appear to be any dispute as to the material

facts or issues raised by this proceeding and because written comments

appear adequate to present the views of all interested parties, a

public hearing has not been scheduled. If any person would like to

present testimony at a public hearing, he or she should follow the

procedures set forth in the DATES and ADDRESSES sections of this

notice.

VI. Preliminary Regulatory Analysis

The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-11, requires

an analysis of the anticipated impact of the proposed repeal of the

Rule on small businesses.\20\ The analysis must contain, as applicable,

a description of the reasons why action is being considered, the

objectives of and legal basis for the proposed action, the class and

number of small entities affected, the projected reporting,

recordkeeping and other compliance requirements being proposed, any

existing federal rules which may duplicate, overlap or conflict with

the proposed action, and any significant alternatives to the proposed

action that accomplish its objectives and, at the same time, minimize

its impact on small entities.

\20\ Section 22 of the FTC Act, 15 U.S.C. 57b-3, also requires

the Commission to issue a preliminary regulatory analysis relating

to proposed rules when the Commission publishes a notice of proposed

rulemaking. The Commission has determined that a preliminary

regulatory analysis is not required by section 22 in this proceeding

because the Commission has no reason to believe that repeal of the

Rule: (1) will have an annual effect on the national economy of

$100,000,000 or more; (2) will cause a substantial change in the

cost or price of goods or services that are used extensively by

particular industries, that are supplied extensively in particular

geographical regions, or that are acquired in significant quantities

by the Federal Government, or by State or local governments; or (3)

otherwise will have a significant impact upon persons subject to the

Rule or upon consumers.

---------------------------------------------------------------------------

A description of the reasons why action is being considered and the

objectives of the proposed repeal of the Rule have been explained

elsewhere in this Notice. Repeal of the Rule would appear to have

little or no effect on any small business. The Commission is not aware

of any existing federal laws or regulations that would conflict with

repeal of the Rule.

In light of these reasons, the Commission certifies, pursuant to

section 605 of RFA, 5 U.S.C. 605, that if the Commission determines to

repeal the Rule that action will not have a significant impact on a

substantial number of small entities. To ensure that no substantial

economic impact is being overlooked, however, the Commission requests

comments on this issue. After reviewing any comments received, the

Commission will determine whether it is necessary to prepare a final

regulatory flexibility analysis.

VII. Paperwork Reduction Act

The Leather Belt Rule imposes third-party disclosure requirements

that constitute ``information collection requirements'' under the

Paperwork

[[Page 8502]]

Reduction Act, 44 U.S.C. 3501 et seq. Accordingly, repeal of the Rule

would eliminate any burdens on the public imposed by these disclosure

requirements.

VIII. 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 Rule 1.18(c) of the Commission's 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 405

Advertising, Clothing, Labeling, Leather and leather products

industry, Trade practices.

Authority: 15 U.S.C. 41-58.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 96-5043 Filed 3-4-96; 8:45 am]

BILLING CODE 6750-01-M