Trade Regulation Rule: Labeling and Advertising of Home Insulation

FEDERAL TRADE COMMISSION

16 CFR Part 460

Trade Regulation Rule: Labeling and Advertising of Home

Insulation

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (the ``Commission'' or ``FTC'')

announces it is retaining its Trade Regulation Rule Concerning the

Labeling and Advertising of Home Insulation (``R-value Rule'' or

``Rule'') and adopting non-substantive amendments to the Rule. The

Commission amends section 460.5(a) of the R-value Rule to allow use of

the R-value test procedure in American Society of Testing and Materials

(``ASTM'') standard test method C 1114-95. The Commission also amends

sections 460.5(a), 460.5(a)(2), 460.5(b), and 460.5(d)(1) to specify

revised versions of additional ASTM standards that are required for

determining the R-value of home insulation. Further, the Commission

amends the Rule to add a summary of the exemptions from specific

requirements of the Rule that the Commission previously granted for

certain classes of persons covered by the Rule. Last, the Commission

adopts a non-substantive amendment to revise section 460.10 to cross-

reference the Commission's enforcement policy statement for foreign

language advertising in 16 CFR 14.9 and to delete the current Appendix

to the Rule, which merely repeats the text of 16 CFR 14.9.

EFFECTIVE DATE: The amendments are effective on April 29, 1996. The

incorporation by reference of certain publications listed in the

regulations is approved by the Director of the Federal Register as of

April 29, 1996.

FOR FURTHER INFORMATION CONTACT: Kent C. Howerton, Attorney, Federal

Trade Commission, Washington, DC 20580, (202) 326-3013 (voice), (202)

326-3259 (fax).

SUPPLEMENTARY INFORMATION:

I. Introduction

On April 6, 1995, as part of its oversight responsibilities and its

program to review all current Commission rules and guides periodically,

the Commission solicited public comments about the economic impact of

and current need for the R-value Rule, 60 FR 17492 (1995).1 At the

same time, the Commission solicited comments on a petition

(``Petition'') requesting the Commission to approve an additional

(fifth) ASTM R-value test procedure as an optional, but not required,

test procedure for determining the R-value of home insulation under the

Rule.

\1\ The Commission reviewed the Rule in 1985 under the

Regulatory Flexibility Act, 5 U.S.C. 610, to determine the economic

impact of the Rule on small entities. Based on that review, the

Commission determined that: There was a continuing need for the

Rule; there was no basis to conclude that the Rule had a significant

impact on a substantial number of small entities; there was no basis

to conclude that the Rule should be amended to minimize its economic

impact on small entities; the Rule did not generally overlap,

duplicate, or conflict with other regulations; and technological,

economic, and other changes had not affected the Rule in any way

that would warrant amending the Rule. 50 FR 13246 (1985).

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The Commission received 42 comments in response to the April 6,

1995 notice.2 The commenters included the following parties:

Manufacturers of cellular plastics, cellulose, mineral fiber, and

reflective insulation products; manufacturers of structural insulated

panels; trade associations comprised of manufacturers of insulation

products and structural insulated panels, professional installers, and

roofing contractors; independent technical consultants to industry; a

government contractor; and individual consumers. Specific issues

addressed by the commenters are described below in Parts III through

VI.

\2\ Plymouth Foam Products (``Plymouth''), comment number #01;

Advanced Foil Systems (``AFS''), #02; W.H. Porter, Inc.

(``Porter''), #03; Benchmark Foam, Inc. (``Benchmark''), #04; Big

Sky Insulations, Inc. (``Big Sky''), #05; Rock Wool Manufacturing

Co. (``Rock Wool Mfg./1''), #06; Rose E. Kettering (``Kettering''),

#07; Matt Anderson (``Anderson''), #08; Marilyn Raeth (``Raeth''),

#09; James A. McGarry (``McGarry''), #10; Structural Insulated Panel

Association (``SIPA''), #11; Tierra Consulting Group (``Tierra''),

#12; EPS Molders Association (``EPSMA''), #13; Western Insulfoam,

Division of Premier Industries, Inc. (``Western''), #14; Fi-Foil

Co., Inc. (``Fi-Foil/Nowman''), #15; Regal Industries, Inc.

(``Regal''), #16; Insulation Contractors Association of America

(``ICAA/1''), #17; England & Associates (``England''), #18;

Cellulose Insulation Manufacturers Association (``CIMA''), #19;

GreenStone Industries (``Greenstone/Tranmer''), #20; Styropor

Business, BASF Corporation (``BASF''), #21; Hamilton Mfg., Inc.

(``Hamilton''), #22; Energy Control, Inc. (``ECI''), #23; North

American Insulation Manufacturers Association (``NAIMA''), #24; The

Celotex Corporation (``Celotex''), #25; Tennessee Technological

University, (``TN Tech''), #26; Superior Aluminum Insulation Inc.

(``Superior''), #27; Oak Ridge National Laboratory (``ORNL/

Yarbrough''), #28; Oak Ridge National Laboratory (``ORNL/Wilkes''),

#29; Polyisocyanurate Insulation Manufacturers Association

(``PIMA''), #30; Midwest Roofing Contractors Association (``MRCA''),

#31; GreenStone Industries (``GreenStone/Smith''), #32; Insulspan,

Inc. (``Insulspan''), #33; Clayville Insulation (``Clayville''),

#34; Tascon, Inc. (``Tascon''), #35; FischerSips Inc.

(``FischerSips''), #36; Dow Chemical Canada Inc. (``Dow/Canada''),

#37; AFM Corporation (``AFM''), #38; Rock Wool Manufacturing Co.

(``Rock Wool Mfg./2''), #39; Insulation Contractors Association of

America (``ICAA/2''), #40; Corbond Corp. (``Corbond''), #41; Fi-Foil

Co., Inc. (``Fi-Foil/Lippy''), #42. The April 6, 1995 notice is

filed as document number B172394. The comments submitted in response

to the that notice are filed as document numbers B17239400001,

B17239400002, etc. In today's notice, the comments are cited as #01,

#02, etc. The Commission's staff added an additional letter from the

Petitioner, R. S. Graves, R & D Services, Inc. This letter, cited as

Graves, #43, was not filed as a comment in response to the April 6,

1995 notice, but instead, as a response to a request for

clarification from the Commission's staff. See Part V and note 64,

infra.

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II. Requirements of the R-Value Rule

The Commission promulgated the R-value Rule under section 18 of the

FTC Act, 15 U.S.C. 57a, on August 27, 1979.3 The Rule became

effective on September 29, 1980, 45 FR 54702 (1980).

\3\ Final trade regulation rule (``Statement of Basis and

Purpose'' or ``SBP''), 44 FR 50218 (1979).

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The R-value Rule covers home insulation products. The Rule defines

``insulation'' as any product mainly used to slow down heat flow, for

example through a house's exterior walls, attic, floors over crawl

spaces, or basement. It defines ``home insulation'' as insulation used

in old or new houses, condominiums, cooperatives, apartments, modular

homes, and mobile homes. The Rule does not cover insulation products

sold for use in commercial or industrial buildings, such as offices or

factories. It does not apply to other products with insulating

characteristics, such as storm windows or doors.

The Rule applies to home insulation manufacturers, professional

installers, retailers, and new home sellers (including sellers of

manufactured or mobile homes). It also applies to testing laboratories

that conduct R-value tests for home insulation manufacturers or other

sellers who use the test results as the basis for making R-value claims

about home insulation products.

The Rule requires that those who manufacture or sell thermal

insulation products for use in residential structures disclose specific

information about the thermal performance of the insulation at

[[Page 13660]]

the point of sale (on product labels, manufacturers' fact sheets, and

receipts or contracts to purchasers from professional installers and

new home sellers), and in advertising and other promotional materials

that contain certain claims. Thermal performance is described by the

product's R-value, which varies among insulation types and forms and

among specific products of the same type and form.4 ``R-value'' is

the recognized numerical measure of the ability of an insulation

product to restrict the flow of heat and, therefore, to reduce energy

costs. The higher the R-value, the better the product's insulating

ability. The major reason consumers purchase thermal insulation is to

reduce energy expenditures to heat and cool their homes. The Rule

requires sellers to have adequate substantiation for these R-value

disclosures and for any energy savings claims they make.

\4\ ``Type'' refers to the material from which the insulation is

made, e.g., fiberglass or cellulose. ``Form'' refers to the physical

form of the product, e.g., batts, loose-fill, or rigid boardstock.

Most home insulation products are ``mass'' insulations, which

restrict the flow of heat through the product's mass. ``Reflective''

insulations (which also are covered by the Rule), on the other hand,

restrict heat flow by reflecting back radiant heat and must be

installed facing an air space.

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The R-value Rule is designed to enable consumers to compare the

thermal performance of competing home insulation products when they

make purchasing decisions. To accomplish this purpose, the Rule

requires sellers (including insulation manufacturers, professional

installers, new home sellers, and retailers who sell insulation to

consumers) to disclose the insulation product's R-value and related

information, based on uniform standards. This information enables

consumers to evaluate how well a particular insulation product is

likely to perform, to determine whether the cost of the insulation is

justified, and to make meaningful cost-benefit purchase decisions among

competing products.

III. Regulatory Review

The Commission has determined, as part of its oversight

responsibilities, to review all current Commission rules and guides

periodically. These reviews seek information about the costs and

benefits of the Commission's rules and guides and their regulatory and

economic impact. The information obtained assists the Commission in

identifying rules and guides that warrant modification or recision. In

the April 6, 1995 notice, the Commission solicited comments on, among

other things, the economic impact of and the continuing need for the R-

value Rule, possible conflict between the Rule and state, local, or

other federal laws or regulations, and the effect on the Rule of any

technological, economic, or other industry changes. The Commission also

solicited comments on whether the Rule should be revised to require the

use of different test procedures or standards than those currently

specified, and whether there are insulation products for which the Rule

does not sufficiently address product-specific issues relating to

testing or preparation of test specimens.

A. Need for the Rule, Benefits, Costs, and Other Burdens

1. Current Need for the Rule

Thirty-one comments specifically addressed the current need for the

Rule. Thirty comments stated that there is a continuing need for the

Rule and supported keeping it in place.5 Only one commenter,

Benchmark, implied that the Rule was not needed, stating that the costs

of complying with the Rule far outweigh the benefits it confers.6

Benchmark did not explain how it reached this conclusion.

\5\ AFS, #02 (must stay in place, keep regulations that work);

Porter, #03 (continue and strengthen); Rock Wool Mfg./1, #06

(provides basic guidelines by which consumers better assured of

receiving full value); Kettering, #07 (R-values must be maintained

or consumer has no guideline and inferior products will be passed

off on the public); Anderson, #08, at 2-3 (labeling ensures

consumers can easily select products with the R-value they want);

Raeth, #09 (eliminating Rule would be a great disservice to

consumers, consumers would not know the value of what purchasing);

McGarry, #10 (do not eliminate or weaken, uses label information to

compare when purchasing); SIPA, #11, at 1 (retain); Tierra, #12, at

1-2 (serves useful public purpose); Western, #14, at 1; Fi-Foil/

Nowman, #15, at 1 (serves useful purpose); Regal, #16, at 1

(retain); ICAA/1, #17, at 1 (necessary); England, #18, at 1 (need

stronger today than ever); CIMA, #19, at 1 (valuable protection for

consuming public); Greenstone/Tranmer, #20, at 1 (critical to

consumers; centralized labeling requirements necessary to maintain

consistency in products, avoid costly production costs resulting

from rules differing from region to region, and encourage

development of advanced products); BASF, #21, at 1 (urges be

retained); Hamilton, #22, at 1 (still needed in today's market);

ECI, #23 (good Rule that should be continued); NAIMA, #24, at 1

(should be maintained, market place would be chaotic in its

absence); Celotex, #25, at 1 (continuing need), at 7 (supports the

Rule); TN Tech, #26, at 1 (extremely important to industry and

consuming public); ORNL/Wilkes, #29, at 1 (supports keeping,

Commission to be commended for promulgating and enforcing the Rule);

PIMA, #30, at 2 (continuing need), at 9 (vigorously supports

retaining and enforcing Rule and applauds FTC for its efforts in

this regard); Greenstone/Smith, #32, at 1 (provides a viable means

of creating broader consumer awareness of insulation value and

maintaining even playing field, without Rule sellers would take

advantage of naive consumers); Insulspan, #33, at 1 (retain);

Clayville, #34, at 3 (still needed to keep a level playing field);

FischerSips, #36, at 1 (retain); Fi-Foil/Lippy, #42 (should be

continued to enable general public to evaluate insulation products).

See also, Rock Wool Mfg./1, #06 (fully supports ICAA's submittal).

\6\ Benchmark, #04.

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Based on the comments, the Commission determines that there is a

continuing need for the Rule.

2. Benefits and Costs to Purchasers

Twenty-four comments described the benefits the Rule confers on

purchasers.7 In summary, the comments described the major benefits

of the Rule to consumers as:

\7\ Porter, #03; Rock Wool Mfg./1, #06; Anderson, #08, at 2-3;

McGarry, #10; Tierra, #12, at 1-2; Western, #14, at 1; Fi-Foil/

Nowman, #15, at 1; ICAA/1, #17, at 1; England, #18, at 1; CIMA, #19,

at 1; Greenstone/Tranmer, #20, at 1; Hamilton, #22, at 1; TN Tech,

#26, at 1; ORNL/Wilkes, #29, at 1-2; PIMA, #30, at 2-3, 9;

Greenstone/Smith, #32, at 1; Clayville, #34, at 1; Celotex, #35, at

1; Fi-Foil/Lippy, #42. See also, Rock Wool Mfg./1, #06; Kettering,

#07; Raeth, #09; ECI, #23; NAIMA, #24, at 1.

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Increasing consumer awareness of the benefits of

insulation; 8

\8\ ORNL/Wilkes, #29, at 1; Greenstone/Smith, #32, at 1.

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Giving consumers the basic thermal performance information

they need to compare insulation products and select those with the R-

value they want,9 at little or no cost; 10

\9\ Anderson, #08, at 2-3; McGarry, #10; Greenstone/Tranmer,

#20, at 1; PIMA, #30, at 2-3; Fi-Foil/Lippy, #42. See Raeth, #09;

ECI, #23.

\10\ ICAA/1, #17, at 1. See also Rock Wool Mfg./1, #06.

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Giving consumers R-value information in a uniform manner

that facilitates easy comparison of competing products; 11

\11\ Tierra, #12, at 1-2; Fi-Foil/Nowman, #15, at 1; England,

#18, at 1; PIMA, #30, at 3; Celotex, #35, at 1.

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Helping ensure that R-value claims are substantiated so

consumers receive what they are promised; 12

\12\ Porter, #03; Tierra, #12, at 1-2; England, #18, at 1;

Hamilton, #22, at 1. See Kettering, #07; Raeth, #09; ECI, #23;

NAIMA, #24, at 1.

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Helping consumers save energy (and heating and cooling

costs) by preventing misrepresentations about R-values of insulation

products,13 and by setting standards for the proper installation

of insulation products; 14

\13\ Porter, #03. See Rock Wool Mfg./1, #06.

\14\ See Rock Wool Mfg./1, #06.

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Saving consumers money by eliminating sales and marketing

practices that lead them to overinsulate or underinsulate; 15

\15\ CIMA, #19, at 1.

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Improving the quality 16 and consistency 17 of

home insulation, encouraging the development of advanced

products,18 and preventing the sale of inferior products; 19

and

\16\ TN Tech, #26, at 1.

\17\ Greenstone/Tranmer, #20, at 1.

\18\ Id.

\19\ See Kettering, #07.

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Reducing the rate of depletion of our nation's limited

energy resources by helping consumers conserve energy

expenditures.20

\20\ ORNL/Wilkes, #29, at 1.

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In addition to the benefits described above, Greenstone/Smith

explained that utility companies have embraced the Rule and developed

their own energy savings programs that depend on the Rule to protect

consumers from fraudulent acts.21 Greenstone/Smith also stated

that state departments of consumer affairs have used the Rule as a

model in writing their laws, which has led to state enforcement actions

that generated publicity and educated consumers. Greenstone/Smith

further stated that consumers would be in a user-beware condition

without the Rule and that sellers would lower their ethical boundaries

and take advantage of naive consumers.22

\21\ Greenstone/Smith, #32, at 1.

\22\ Id. See also NAIMA, #24, at 1; ORNL/Wilkes, #29, at 2.

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Sixteen commenters addressed the costs the Rule imposes on

purchasers. Fifteen of these commenters stated that they did not

believe the Rule imposes significant costs on purchasers.23 Only

one, Benchmark, stated that the costs imposed by the Rule outweigh the

Rule's benefits.24 In brief, the commenters other than Benchmark

expressed the following views concerning costs the Rule imposes on

consumers:

\23\ Rock Wool Mfg./1, #06; Tierra, #12, at 2; Western, #14, at

1; Fi-Foil/Nowman, #15, at 1; ICAA/1, #17, at 1; England, #18, at 1;

CIMA, #19, at 1; Greenstone/Tranmer, #20, at 2; Hamilton, #22, at 1;

Celotex, #25, at 1; TN Tech, #26, at 1; ORNL/Wilkes, #29, at 2-3;

PIMA, #30, at 3, 9; Greenstone/Smith, #32, at 1; Clayville, #34, at

1.

\24\ Benchmark, #04.

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no cost; 25

\25\ Rock Wool Mfg./1, #06; ICAA/1, #17, at 1; CIMA, #19, at 1;

Hamilton, #22, at 1.

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Minimal or insignificant cost,26 or small cost when

spread over volume of production; 27

\26\ Celotex, #25, at 1; TN Tech, #26, at 1; PIMA, #30, at 3, 9;

Clayville, #34, at 1.

\27\ Greenstone/Tranmer, #20, at 2; ORNL/Wilkes, #29, at 2-3.

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Very small cost imposed is offset by improved product

quality and the benefit-to-cost ratio is very large; 28

\28\ TN Tech, #26, at 1. See Greenstone/Tranmer, #20, at 2.

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Any cost already has been born by manufacturers and is

embedded in product pricing; 29

\29\ Tierra, #12, at 2; Fi-Foil/Nowman, #15, at 1.

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Required testing should already have been done so the only

additional cost is the Fact Sheet, which can be produced at minimal

expense; 30

\30\ Greenstone/Smith, #32, at 1.

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Possibly has imposed cost, but not nearly the waste of

money that would have occurred without the Rule; 31 and

\31\ Western, #14, at 1.

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Has saved consumers on cost.32

\32\ England, #18, at 1.

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Based on the comments, the Commission determines that the Rule

provides substantial benefits to consumers, while imposing no

significant costs on them.

3. Benefits and Burdens or Costs to Firms

Ten comments addressed the benefits provided to firms covered by

the Rule.33 According to the comments, the Rule benefits firms by:

\33\ Porter, #03; Tierra, #12, at 1-2; Western, #14, at 1, but

see, at 2; England, #18, at 2; Greenstone/Tranmer, #20, at 3;

Celotex, #25, at 2; PIMA, #30, at 2, 4, 9; Greenstone/Smith, #32, at

1; Clayville, #34, at 1, 3. See NAIMA, #24, at 1.

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Creating a level playing field through standardized

guidelines for labeling, testing, and evaluation, which promote

legitimate competition and make it easier for honest manufacturers to

compete; 34

\34\ Porter, #03; Tierra, #12, at 1-2; Western, #14, at 1, but

see, at 2 (not much benefit for Western); Greenstone/Tranmer, #20,

at 3; Celotex, #25, at 2; Clayville, #34, at 3. See also NAIMA, #24,

at 1 (marketplace would be chaotic in its absence).

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Providing a more even market place in which it is easier

for industry to attempt to regulate itself; 35

\35\ England, #18, at 2.

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Enhancing competition by enabling suppliers to convey

truthfully and meaningfully the insulation properties of their

products; 36 and

\36\ PIMA, #30, at 2.

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Providing guidelines for product testing and evaluation

and creating confidence in the residential buyer's mind.37

\37\ Id. at 4.

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As pointed out in Part III.A.2, above, Greenstone/Smith stated that

individual utility companies have developed energy savings programs

that depend on the Rule to protect consumers from fraudulent

acts.38 According to the commenter, by encouraging consumers to

insulate homes, these programs benefit firms by generating an ever-

increasing demand for products covered by the Rule.

\38\ Greenstone/Smith, #32, at 1 .

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Fourteen comments addressed the burdens or costs imposed on firms

covered by the Rule. Eleven of these stated that the Rule had not

imposed any significant costs on firms.39 Tierra stated merely

that any costs due to the Rule already were imbedded in the pricing of

the products.40 Fi-Foil/Nowman stated that the Rule had a

substantial economic impact on industry members originally because it

required redesigning and reprinting packaging and promotional materials

to meet the labeling requirements, but that these costs already had

been borne by manufacturers.41 Benchmark stated that the costs

imposed by the Rule outweigh its benefits.42

\39\ Rock Wool Mfg./1, #06 (not aware of any significant added

cost); Western, #14, at 2 (for it $0); ICAA/1, #17, at 1 (no

significant cost burden); England, #18, at 2 (none, because what

Rule requires should be done anyway); CIMA, #19, at 2 (few

incremental costs of compliance since requirements are based on

existing industry and government standards); Greenstone/Tranmer,

#20, at 3 (does not impose large financial burden); Hamilton, #22,

at 1 (do not think it has imposed additional costs); Celotex, #25,

at 2 (no significant burdens or costs since R-value data is

necessary for marketing, quality control, and research purposes);

PIMA, #30, at 4 (no significant burdens or costs, benefits clearly

outweigh any burdens or costs), at 9 (does not impose significant

burden or cost); Greenstone/Smith, #32, at 1 (required testing

should already have been done when Commission issued Rule and no

additional tests were required, only additional cost was Fact Sheet

which could be produced at minimal expense to manufacturer);

Clayville, #34, at 1 (doesn't believe the Rule has imposed any

excessive costs on manufacturers or contractors).

\40\ Tierra, #12, at 2.

\41\ Fi-Foil/Nowman, #15, at 1.

\42\ Benchmark, #04.

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Based on the comments, the Commission determines that the Rule

benefits firms by creating a level playing field that promotes

competition, by providing a market place in which industry can more

easily regulate itself, by providing guidelines to industry for product

testing and evaluation, and by creating consumer confidence. The

Commission also determines that the Rule does not impose significant

ongoing costs on firms.

B. Other Federal, State, or Local Laws or Regulations

Nine comments addressed the existence of other federal, state, or

local laws or regulations. None of the commenters was aware of any

conflicts with other federal, state, or local laws or

regulations.43 England stated that the Rule strengthens other

federal, state, and local laws and regulations.44 Celotex and PIMA

explained that the Rule is a consumer protection regulation, which does

not address issues such as building energy conservation standards that

are regulated elsewhere at the federal, state, and local levels.45

Greenstone/Smith stated that the Rule has been precedent-setting rather

than conflicting, and that

[[Page 13662]]

utility companies have embraced the Rule's requirements and developed

energy-saving programs that depend on the Rule to protect consumers

from fraudulent acts.46

\43\ Rock Wool Mfg./1, #06; Tierra, #12, at 3; Western, #14, at

3; England, #18, at 2; CIMA, #19, at 2; Greenstone/Tranmer, #20, at

4; Celotex, #25, at 2; PIMA, #30, at 5; Greenstone/Smith, #32, at 1.

\44\ England, #18, at 2 .

\45\ Celotex, #25, at 2; PIMA, #30, at 5.

\46\ Greenstone/Smith, #32, at 1.

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Based on the comments, the Commission determines that there is no

reason to believe that the Rule conflicts with other federal, state, or

local laws or regulations.

IV. Adoption of Current ASTM Standards

The Rule currently requires that the R-value of each home

insulation product be determined based on tests conducted according to

ASTM C 177-85, C 236-87, C 518-85, or C 976-82.47 It requires that

R-values based upon heat flux measurements under C 177-85 or C 518-85

be reported in accordance with ASTM standard practice C 1045-85. It

also requires that, for loose-fill cellulose, the tests be conducted at

the settled density determined under ASTM C 739-88 (``Standard

Specification for Cellulosic Fiber (Wood-Base) Loose-Fill Thermal

Insulation'').48

\47\ In citations of ASTM standards, the letter and first series

of numbers refer to the basic standard; the number following the

hyphen refers to the version of the standard (denoting the year in

which the version was adopted and published by ASTM).

\48\ This section discusses only the comments that recommended

the Commission revise the Rule concerning specific ASTM test

procedures and other standards that currently are required by the

Rule. It does not discuss the comments that recommended the

Commission adopt additional or different ASTM or other test

procedures or standards that are not currently required by the Rule.

See Part VI, infra.

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Four comments discussed which versions of specified ASTM test

procedures or other standards should be required by the Rule. Celotex

and PIMA recommended that the Commission revise the Rule to require the

use of current versions of required ASTM standards that are

incorporated into the Rule. Specifically, they recommended that the

Commission amend the Rule to require use of the following versions of

ASTM standards: ASTM C 177-85 (1993), ASTM C 236-89 (1993), ASTM C 518-

91, ASTM C 976-90, ASTM C 1045-90.49 NAIMA recommended that the

Commission revise section 460.5(a)(2) to require settled density

testing of loose-fill cellulose according to C 739-91.50 No

comments opposed adoption of these current versions of the ASTM

standards.

\49\ Celotex, #25, at 3; PIMA, #30, at 5. Both comments stated

that the 1993 revisions to C 177-85 and C 236-89 (the year 1993 is

indicated in parentheses in the standards) were editorial only.

\50\ NAIMA, #24, at 2.

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NAIMA pointed out that an alternative to referencing current

versions of ASTM standards would be to omit the specific version and

rely on the language in section 460.7 of the Rule, 16 CFR 460.7.51

Section 460.7 provides that updated, final ASTM test methods

automatically replace the old ones in the Rule 90 days after

publication by ASTM. Greenstone/Smith agreed with this approach.52

\51\ Id. at 7.

\52\ Greenstone/Smith, #32, at 3.

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ASTM was organized in 1898. A not-for-profit organization, it is

one of the largest voluntary standards-development organizations in the

world. ASTM's members (approximately 36,000 worldwide) include

producers, users, ultimate consumers, and those having a general

interest (including government and academia). Through 132 standards-

writing committees, ASTM publishes more than 9,500 standards each year.

Membership in ASTM is open to all interested parties concerned with the

fields in which ASTM is active.53 ASTM standards are developed

through a consensus-type process and are used voluntarily. They become

legally binding only when a government body references them in

regulations, or when they are cited in a contract. ASTM standards are

subject to revision at any time by the responsible technical committee

and must be reviewed every five years, and if not revised, either

reapproved or withdrawn.54 ASTM's C-16 Committee on Thermal

Insulation is the standards-writing committee responsible for virtually

all of the ASTM standards referenced in the R-value Rule.

\53\ 1995 Annual Book of ASTM Standards, Section 4, Volume 04.06

(Thermal Insulation; Environmental Acoustics), at iii.

\54\ Id. at iv.

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Section 460.7 of the Rule provides for automatic incorporation into

the Rule of revisions to these ASTM test procedures. As part of this

automatic incorporation, the Commission originally cited in the Rule

only the basic test procedures and other standards, not the specific

version of each then in effect. Under section 460.7, when ASTM changed

a test procedure required by the Rule, the new version automatically

replaced the old one in the Rule 90 days after ASTM first published the

change.55 In 1990, the Commission amended the Rule to specify the

version of each ASTM test procedure that would be required in the

future. 55 FR 10053 (1990). The Commission explained that, because it

previously had taken no action to consider any of the revisions to the

required test procedures that ASTM had adopted since the Commission

promulgated the Rule, the Commission in effect had adopted the revised

procedures. Id. at 10054.

\55\ Under section 460.7, the Commission's staff or a person

affected by the change can petition the Commission during the 90-day

period not to adopt the change or to reopen the rulemaking

proceeding to consider it further.

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The Office of the Federal Register (``OFR'') specifies additional

procedures that federal agencies must follow when they promulgate rules

requiring the use of private standards that are not printed in full in

the Code of Federal Regulations (``CFR'') (i.e., when they incorporate

private standards by reference). Section 51.1(f) of OFR's regulations

states that incorporation by reference is limited to the edition of the

publication that is approved by the Director of the Federal Register. 1

CFR 51.1(f). Section 51.9 of OFR's regulations requires that each

``incorporation by reference'' in a federal rule specifically identify

the standard to be incorporated, including the title, date, edition,

author, publisher, and identification number of the publication. 1 CFR

51.9.

Under Federal Register requirements, therefore, the Commission does

not have discretion to require compliance generally with the ``latest''

or ``current'' version of ASTM test procedures or other standards. If

ASTM adopts and publishes revised test procedures or other standards

required by the Rule, however, the Commission may update its

incorporation by reference of these standards by obtaining permission

for the incorporation by reference from the Director of the Federal

Register and publishing an amendment to the Rule that requires the use

of the revised standard in the future.

ASTM standards C 177-85, C 236-87, C 518-85, C 976-82, C 1045-85,

and C 739-88, which currently are specified in the Rule, have been

revised by ASTM since the Commission adopted those versions of the

standards in 1990.56 Because the Commission has taken no action to

consider any of the revised standards adopted by ASTM, and has received

no petitions to consider them, section 460.7 of the Rule has

authorized, but not required, use of the revised ASTM standards for

compliance with the Rule.

\56\ 55 FR 10053 (1990).

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Based on the comments and the text of the revised versions of the

ASTM standards recommended by the commenters, the Commission believes

that these revisions to the versions of the standards currently

required by the Rule have been primarily technical changes or editorial

comments, and not significant, substantive revisions. The

[[Page 13663]]

Commission, therefore, amends the Rule to require use of the revised,

current versions of these standards that are published in volume 04.06,

section 4, of the 1995 Annual Book of ASTM Standards. Because the

revisions appear to be technical changes or editorial comments, not

significant, substantive revisions, the Commission determines that

these amendments are non-substantive under section 18(d)(2)(B) of the

FTC Act, 15 U.S.C. 57a(d)(2)(B).

The amendments require that all future tests by manufacturers or

others to substantiate R-value claims for home insulation products be

based on the revised standards. Manufacturers or others whose home

insulation products have not changed can continue to rely on tests

conducted according to the versions of the standards that were required

by the Rule at the time the tests were conducted. Under section 460.7

of the Rule, in the future the Commission will accept, but not require,

the use of a revised version of any of these standards 90 days after

ASTM adopts and publishes the revision. The Commission may, however,

reopen the rulemaking proceeding during the 90-day period or at any

later time to consider whether it should require use of the revised

procedure or reject it under section 460.5 of the Rule, 16 CFR 460.5.

V. Proposed Non-Substantive Amendment to Allow Use of an Additional

ASTM R-value Test Procedure

In the April 6, 1995 notice, the Commission also solicited comments

on the Petition from Ronald S. Graves, Research Staff Member, Materials

Analysis Group, at Martin Marietta Energy Systems, Inc.57 The

Petition requested that the Commission include an additional (fifth)

ASTM R-value test procedure (``ASTM C 1114-92--Standard Test Method for

Steady-State Thermal Transmission Properties by Means of the Thin-

Heater Apparatus''), as an approved test method for complying with

section 460.5(a) of the R-value Rule, 16 CFR 460.5(a). This test method

is under the jurisdiction of ASTM Committee C-16 on Thermal

Measurements (the ASTM Committee responsible for the other R-value test

procedures required by the R-value Rule), and is the direct

responsibility of ASTM Subcommittee C16.30 on Thermal Measurements. Mr.

Graves is the Chairman of the Thin Heater Task Group within C16.30 that

meets semiannually to maintain and keep ASTM C 1114 current.

\57\ 60 FR at 17493-94. Martin Marietta Energy Systems, Inc.,

operates Oak Ridge National Laboratory (``ORNL'') as a contractor

for the U.S. Department of Energy. The Petition, plus attachments,

has been placed on the public record of the R-value Rule, File No.

R811001, and can be inspected at the Commission's Public Reference

Room, Room 130, Sixth Street and Pennsylvania Avenue, NW,

Washington, DC.

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Based on the documentation submitted with the Petition, the

Commission stated its belief that the accuracy of the ASTM C 1114-92

test procedure compared favorably to that of other ASTM R-value test

procedures the Commission has adopted under the R-value Rule.58

The Commission, therefore, stated that it was considering adopting a

non-substantive amendment to section 460.5(a) of the Rule to include

ASTM C 1114-92 as an optional, but not required, test procedure for

determining the R-value of home insulation. Because the proposed

amendment would not impose any new obligations upon parties covered by

the Rule, or lessen the protections afforded consumers by the Rule, the

Commission stated that the proposed change appeared to be non-

substantive under section 18(d)(2)(B) of the FTC Act, 15 U.S.C.

57a(d)(2)(B). For these reasons, the Commission stated that it did not

have to solicit public comment or follow the rulemaking proceedings

that would be required for a substantive amendment to the Rule. On the

other hand, because the Commission was soliciting comments as part of

its regulatory review of the Rule, as a matter of discretion the

Commission determined to solicit comments on the Petition at the same

time.

\58\ The Commission noted that C 1114-92 had been adopted as an

official ASTM standard and, therefore, it appeared that the industry

recognized it as an accurate and appropriate test procedure.

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Twelve comments addressed the proposed adoption of ASTM C 1114-92

as an optional R-value test procedure. Nine comments recommended that

the Commission adopt the test procedure or said that they had no

objections.59 Of these, Regal stated that the adoption of the test

procedure was ``appropriate.'' Celotex and PIMA stated that the test

procedure has shown excellent correlation to the R-value test

procedures currently required by the Rule. ORNL/Wilkes stated that the

test procedure is a test method that has proven minimal uncertainty,

high reproducibility, and broad applicability to a variety of existing

and advanced insulation materials.

\59\ Tierra, #12, at 1-3; Fi-Foil/Nowman, #15, at 1; Regal, #16,

at 1; England, #18, at 4; Hamilton, #22, at 3; Celotex, #25, at 6;

PIMA, #30, at 8; Fi-Foil/Lippy, #42; ORNL/Wilkes, #29, at 2.

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

Three comments expressed reservations about the proposed adoption

of ASTM C 1114-92. Rock Wool Mfg./1 agreed that the Commission's

proposal to adopt the test procedure would be appropriate, if the

Commission is assured that the results are comparable with other

required tests.60 Western stated that adding C 1114-92 may help

reduce burdens or costs imposed by the Rule,61 but later responded

specifically to the issue of adopting the test procedure with ``no

comment.'' 62 MRCA expressed concern that the test procedure would

replace ASTM tests C 177 and C 518, that only two pieces of equipment

currently are available to conduct the C 1114 test, that available test

equipment is proprietary, and that more labs should use the equipment

to obtain comparable test results before the FTC accepts the

procedure.63

\60\ Rock Wool Mfg./1, #06.

\61\ Western, #14, at 2.

\62\ Id. at 3.

\63\ MRCA, #31, at 1-2.

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The Commission has determined to adopt a non-substantive amendment

to allow use of ASTM C 1114-95 as an optional, but not required, test

method for determining the R-value of home insulation under section

460.5(a) of the R-value Rule.64 Based on the data submitted with

the Petition and the comments, the Commission believes that the

accuracy of the ASTM C 1114-95 test procedure compares favorably with

the other ASTM R-value test procedures the Commission has adopted under

the R-value Rule. Because the amendment imposes no new obligations upon

parties covered by the Rule (but merely recognizes the use of an

optional R-value test procedure), and because the accuracy of the test

procedure compares favorably to the test procedures already required by

the Rule, the Commission has determined that this amendment is non-

substantive under section 18(d)(2)(B) of the FTC Act, 15 U.S.C.

57a(d)(2)(B).

\64\ ASTM published revised version C 1114-95 of the standard in

August 1995, after the comment period ended. According to the

petitioner, the revised version contains merely technical,

housekeeping changes. The Commission, therefore, considers the

documentation in support of the Petition and the comments to apply

to revised version C 1114-95. Graves, #43.

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VI. Other Issues

In addition to the subjects discussed above, the comments raised

numerous other issues relating to the Rule. For example:

Whether the scope of the Rule should be expanded to cover

insulation sold for use in the commercial market, the thermal

efficiency of building systems (such as insulation used in structural

panels), or new products

[[Page 13664]]

(such as cellulose batts, cotton batts, cotton loose-fill, stabilized

cellulose);

Whether the Rule should require different or new

procedures or specify additional requirements for preparing test

specimens for certain types of insulation products (such as aging

cellular plastics insulations, determining the long-term density of

loose-fill mineral fiber insulations);

Whether the Rule should take into consideration additional

factors that can affect the thermal performance of specific products in

actual use (such as temperature differences, the effect of convection

during winter conditions); and

Whether the Rule should impose additional requirements on

manufacturers or installers to help consumers ensure that the requisite

amount of insulation has been installed in their homes.

Adopting the commenters' recommendations to cover, for example,

additional products and to create new Rule requirements would require

substantive amendments under section 18(d)(2)(B) of the FTC Act, 15

U.S.C. 57a(d)(2)(B). In addition, some of the comments suggested

requiring the use of specific proposed ASTM test procedures when ASTM

adopts them as final procedures. Because these test procedures are not

yet final ASTM standards, it is premature for the Commission to

consider requiring that they be used to determine the R-values of home

insulation products.

The Commission is continuing to review the issues raised by the

comments and the most efficient and effective methods of dealing with

them, which may not necessarily include further rulemaking. For

example, the Commission could bring enforcement actions against

specific companies whose practices are not covered by the Rule, but who

are engaging in unfair or deceptive acts or practices under section 5

of the FTC Act, 15 U.S.C. 45. Another option might be for the

Commission to provide affected industry members informal guidance

instead of adopting substantive amendments to the Rule. The Commission

will address these other issues in other notices or forums.

VII. Exemptions

Section 18(g)(2) of the FTC Act, 15 U.S.C. 57a(g)(2), authorizes

the Commission to exempt a person or class of persons from all or part

of a trade regulation rule if the Commission finds that application of

the rule is not necessary to prevent the unfair or deceptive acts or

practices to which the rule relates. Since the R-value Rule became

effective, the Commission, in response to petitions from industry

representatives, has granted exemptions from specific requirements of

the Rule to certain classes of sellers. The Commission granted these

exemptions after soliciting public comment.

Although the Commission published the exemptions in the Federal

Register, the exemptions are not cited in the text of the Rule in the

Code of Federal Regulations. To assist industry members in

understanding their responsibilities under the Rule, the Commission has

determined to amend the Rule to include a summary of the exemptions as

an Appendix to the Rule. These non-substantive amendments do not alter

the requirements of the Rule. They merely summarize the previously-

granted exemptions as an Appendix to the Rule for easier reference.

Industry members should review the decisions published in the Federal

Register where the Commission granted the exemptions for a more

complete description of the scope of the exemptions. The summaries in

the Appendix include the citations to those decisions.

A. Manufacturers of Perlite Insulation

The Commission granted the first exemption in response to a

petition from a trade association representing manufacturers of perlite

insulation products, 46 FR 22179 (1981). The petitioner requested that

the Commission exempt manufacturers of perlite insulation from sections

460.12(b)(2) and 460.13(c)(1) of the Rule, 16 CFR 460.12(b)(2),

460.13(c)(1), which require that they disclose on labels and fact

sheets the minimum weight per square foot of perlite insulation

products that is necessary to achieve a specific R-value.

The Rule's label and fact sheet disclosure requirements were based

on the fact that, for most insulation products, as the density

increases, the R-value per unit of thickness increases. The Rule,

therefore, requires that sellers of loose-fill insulations, including

perlite, disclose the minimum weight per square foot that is required

to achieve the density and thickness necessary for the claimed total R-

value. Unlike other insulation products, however, as the density of

most perlite insulation increases, the R-value per unit of thickness

decreases. Thus, if these perlite insulations are installed at

densities greater than the thicknesses and weights per square foot

listed on their labels and fact sheets, the consumer may not receive

the claimed R-values. The petitioner requested that the label and fact

sheet disclosure requirements be changed to require disclosure of

maximum weight per square foot.

The Commission exempted manufacturers of perlite insulation

products that have an inverse relationship between R-value and density

or weight per square foot from the requirements in sections

460.12(b)(2) and 460.13(c)(1) of the Rule that they disclose minimum

weight per square foot for R-values listed on labels and fact sheets.

The exemption is conditioned upon the alternative disclosure in labels

and fact sheets of the maximum weight per square foot for each R-value

listed. All other requirements of the Rule apply to sellers of these

perlite home insulation products.

B. Manufacturers of Rigid, Flat-Roof Insulation

The Commission granted the second exemption in response to

petitions filed by four manufacturers of rigid, flat-roof insulation

products and two trade associations representing such manufacturers, 46

FR 22180 (1981). One of the trade associations and all four

manufacturers requested an exemption from all requirements of the Rule

for rigid, flat-roof insulation products that are used in flat, built-

up roofs. The other trade association limited its request to an

exemption from the labeling requirements of section 460.12 of the Rule,

16 CFR 460.12.

The petitioners stated that more than 95 percent of the rigid,

flat-roof insulation boards sold were used in commercial or industrial

buildings and, therefore, were not covered by the Rule. They

acknowledged, however, that some of the products were used in multi-

family residential buildings, such as flat-roof apartments or

condominium buildings. The petitioners stated that manufacturers have

no way of knowing which products would be used in residential

applications. If manufacturers were required to label all products for

residential use according to the Rule, they would be required to assume

the unnecessary expense of labeling every package of insulation even

though only a small percentage would be used in residential

applications. Furthermore, since these products were used primarily in

large, multi-family, flat-roof buildings, petitioners asserted that the

labeling information was unnecessary because the product generally

would be selected by an architect or another professional, not the

ultimate consumer.

The Commission exempted manufacturers of rigid, flat-roof

insulation products that are used in flat, built-up roofs from the

requirement in

[[Page 13665]]

section 460.12 that all insulation products that might be used in

residential buildings be labeled with required R-value information. All

other requirements of the Rule apply to sellers of these products.

C. New Home Sellers

The Commission granted the third exemption in response to a

petition filed by a trade association representing new home sellers, 48

FR 31192 (1983). The petitioner requested that new home sellers be

exempted from certain requirements of sections 460.18 and 460.19 of the

Rule, 16 CFR 460.18, 460.19. Section 460.18 requires that

advertisements and other promotional materials that make certain claims

about a home insulation product include specific disclosures. Section

460.19 requires that ads and other promotional materials that claim

home insulation can cut fuel bills or fuel use (``energy savings

claims'') include specific disclosures, and that advertisers have a

reasonable basis for the claims and maintain records substantiating the

claims.

The Commission determined that certain disclosures in new home

advertisements and other promotional materials, which would have been

required by the Rule, were not necessary to prevent the unfair or

deceptive acts or practices to which the Rule relates. The Commission,

therefore, exempted new home sellers from:

(1) The requirement, under section 460.18(a), that they disclose

the type and thickness of the insulation when they make a

representation about the R-value of the insulation in a new home;

(2) the requirement that they disclose the R-value explanatory

statement under section 460.18(a) or the savings explanatory

statement under section 460.19(b), conditioned upon the new home

seller alternatively disclosing the appropriate explanatory

statement in the sales contract along with the disclosures required

by section 460.16, 16 CFR 460.16; 65

\65\ Under section 460.19(d), ads or other promotional materials

that otherwise would require both the R-value explanatory statement

under section 460.18(a) and the savings claim explanatory statement

under section 460.19(b) need only contain the savings claim

explanatory statement. This option applies under the exemption to

new home sellers who choose to make the explanatory statement in the

sales contract instead of in the ad or other promotional material.

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

(3) the requirement that they make the disclosures specified in

section 460.19(c) if they claim that insulation, along with other

products in a new home, will cut fuel bills or fuel use; and

(4) the requirement that they include the reference to fact

sheets when they must disclose the R-value explanatory statement or

the savings claim explanatory statement under sections 460.18(a) or

460.19(b), respectively.

These exemptions also apply to home insulation sellers other than

new home sellers (such as home insulation manufacturers) when they

participate with a new home seller to advertise and promote the sale of

new homes, provided that the primary thrust of the advertisement or

other promotional material is the promotion of new homes, and not the

promotion of the insulation product. All other requirements of the

Rule, including the section 460.19 substantiation and recordkeeping

requirements for energy savings claims made in ads and other

promotional materials, apply to new home sellers and those who

participate with a new home seller to advertise and promote the sale of

new homes or home insulation products.

VIII. Summary of Commission's Determinations

For the reasons set forth in this notice, the Commission: 66

(1) retains the R-value Rule; (2) adopts a non-substantive amendment to

section 460.5(a) of the Rule to allow the use of ASTM C 1114-95 as an

optional, but not required, test procedure to determine the R-value of

home insulation; (3) adopts non-substantive amendments to sections

460.5(a), 460.5(a)(2), 460.5(b), and 460.5(d)(1) of the Rule to require

the use of ASTM C 177-85 (1993), ASTM C 236-89 (1993), ASTM C 518-91,

ASTM C 976-90, ASTM C 1045-90, and ASTM C 739-91 to determine the R-

value of home insulation; (4) adopts a non-substantive amendment to add

an Appendix to the Rule, summarizing the exemptions from specific

requirements of the Rule that the Commission previously granted for

certain classes of persons covered by the Rule; and (5) adopts a non-

substantive amendment to revise section 460.10 to cross-reference the

Commission's enforcement policy statement for foreign language

advertising in 16 CFR 14.9 and to delete the current Appendix to the

Rule, which merely repeats the text of 16 CFR 14.9.

\66\ In addition to the amendments described in the text of this

notice, the Commission also adopts a non-substantive amendment to

section 460.10 and removes the current Appendix (``Enforcement

Policy Statement for Foreign Language Advertising''). Section 460.10

previously required compliance with the disclosure requirements

described in the Appendix. The Appendix simply reprinted 16 CFR

14.9. Amended section 460.10 refers directly to 16 CFR 14.9,

eliminating unnecessary duplication.

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List of Subjects in 16 CFR Part 460

Advertising, Incorporation by reference, Insulation, Labeling,

Trade practices.

Text of Amendments

Accordingly, the Commission amends 16 CFR Part 460 to read as

follows:

PART 460--[AMENDED]

1. The authority citation for Part 460 is amended to read as

follows:

Authority: 15 U.S.C. 41 et seq.

2. In section 460.5, the introductory text, paragraph (a)

introductory text, paragraphs (a)(2) and (b), paragraph (d)

introductory text and paragraph (d)(1) are revised to read as follows:

Sec. 460.5 R-value tests.

R-value measures resistance to heat flow. R-values given in labels,

fact sheets, ads, or other promotional materials must be based on tests

done under the methods listed below. They were designed by the American

Society of Testing and Materials (ASTM). The test methods are:

(a) All types of insulation except aluminum foil must be tested

with ASTM C 177-85 (Reapproved 1993), ``Standard Test Method for

Steady-State Heat Flux Measurements and Thermal Transmission Properties

by Means of the Guarded-Hot-Plate Apparatus;'' ASTM C 236-89

(Reapproved 1993), ``Standard Test Method for Steady-State Thermal

Performance of Building Assemblies by Means of a Guarded Hot Box;''

ASTM C 518-91, ``Standard Test Method for Steady-State Heat Flux

Measurements and Thermal Transmission Properties by Means of the Heat

Flow Meter Apparatus;'' ASTM C 976-90, ``Standard Test Method for

Thermal Performance of Building Assemblies by Means of a Calibrated Hot

Box;'' or ASTM C 1114-95, ``Standard Test Method for Steady-State

Thermal Transmission Properties by Means of the Thin-Heater

Apparatus.'' The tests must be done at a mean temperature of 75 deg.

Fahrenheit. The tests must be done on the insulation material alone

(excluding any airspace). R-values (``thermal resistance'') based upon

heat flux measurements according to ASTM C 177-85 (Reapproved 1993) or

ASTM C 518-91 must be reported only in accordance with the requirements

and restrictions of ASTM C 1045-90, ``Standard Practice for Calculating

Thermal Transmission Properties from Steady-State Heat Flux

Measurements.'' These incorporations by reference were approved by the

Director of the Federal Register in accordance with 5 U.S.C. 552(a) and

1 CFR Part 51. Copies of the test procedures and standard practice may

be obtained from the American Society of Testing and Materials, 1916

Race Street, Philadelphia, PA 19103.

[[Page 13666]]

Copies may be inspected at the Federal Trade Commission, Public

Reference Room, Room 130, Sixth Street and Pennsylvania Ave., NW,

Washington, DC, or at the Office of the Federal Register, 800 North

Capital St., NW, suite 700, Washington, DC.

(1) * * *

(2) For loose-fill cellulose, the tests must be done at the settled

density determined under paragraph 8 of ASTM C 739-91, ``Standard

Specification for Cellulosic Fiber (Wood-Base) Loose-Fill Thermal

Insulation.'' This incorporation by reference was approved by the

Director of the Federal Register in accordance with 5 U.S.C. 552(a) and

1 CFR Part 51. Copies of the test procedure may be obtained from the

American Society of Testing and Materials, 1916 Race Street,

Philadelphia, PA 19103. Copies may be inspected at the Federal Trade

Commission, Public Reference Room, Room 130, Sixth Street and

Pennsylvania Ave., NW, Washington, DC, or at the Office of the Federal

Register, 800 North Capital St., NW, suite 700, Washington, DC.

* * * * *

(b) Aluminum foil systems with more than one sheet must be tested

with ASTM C 236-89 (Reapproved 1993) or ASTM C 976-90, which are

incorporated by reference in paragraph (a) of this section. The tests

must be done at a mean temperature of 75 deg. Fahrenheit, with a

temperature differential of 30 deg. Fahrenheit.

* * * * *

(d) For insulation materials with foil facings, you must test the

R-value of the material alone (excluding any air spaces) under the

methods listed in paragraph (a) of this section. You can also determine

the R-value of the material in conjunction with an air space. You can

use one of two methods to do this:

(1) You can test the system, with its air space, under ASTM C 236-

89 (Reapproved 1993) or ASTM C 976-90, which are incorporated by

reference in paragraph (a) of this section. If you do this, you must

follow the rules in paragraph (a) of this section on temperature, aging

and settled density.

* * * * *

3. Section 460.10 is revised to read as follows:

Sec. 460.10 How statements must be made.

All statements called for by this regulation must be made clearly

and conspicuously. Among other things, you must follow the Commission's

enforcement policy statement for clear and conspicuous disclosures in

foreign language advertising and sales materials, 16 CFR 14.9.

4. The ``Appendix to Part 460--Enforcement Policy Statement for

Foreign Language Advertising'' is removed.

5. A new Appendix is added, to read as follows:

Appendix to Part 460--Exemptions

Section 18(g)(2) of the Federal Trade Commission Act, 15 U.S.C.

57a(g)(2), authorizes the Commission to exempt a person or class of

persons from all or part of a trade regulation rule if the

Commission finds that application of the rule is not necessary to

prevent the unfair or deceptive acts or practices to which the rule

relates. In response to petitions from industry representatives, the

Commission has granted exemptions from specific requirements of 16

CFR Part 460 to certain classes of sellers. Some of these exemptions

are conditioned upon the performance of alternative actions. The

exemptions are limited to specific sections of Part 460. All other

requirements of Part 460 apply to these sellers. The exemptions are

summarized below. For an explanation of the scope and application of

the exemptions, see the formal Commission decisions in the Federal

Register cited at the end of each exemption.

(a) Manufacturers of perlite insulation products that have an

inverse relationship between R-value and density or weight per

square foot are exempted from the requirements in sections

460.12(b)(2) and 460.13(c)(1) that they disclose minimum weight per

square foot for R-values listed on labels and fact sheets. This

exemption is conditioned upon the alternative disclosure in labels

and fact sheets of the maximum weight per square foot for each R-

value required to be listed. 46 FR 22179 (1981).

(b) Manufacturers of rigid, flat-roof insulation products used

in flat, built-up roofs are exempted from the requirements in

section 460.12 that they label these home insulation products. 46 FR

22180 (1981).

(c) New home sellers are exempted from:

(1) the requirement in section 460.18(a) that they disclose the

type and thickness of the insulation when they make a representation

in an advertisement or other promotional material about the R-value

of the insulation in a new home;

(2) the requirement that they disclose in an advertisement or

other promotional material the R-value explanatory statement

specified in section 460.18(a) or the savings explanatory statement

specified in section 460.19(b), conditioned upon the new home

sellers alternatively disclosing the appropriate explanatory

statement in the sales contract along with the disclosures required

by section 460.16;

(3) the requirement that they make the disclosures specified in

section 460.19(c) if they claim that insulation, along with other

products in a new home, will cut fuel bills or fuel use; and

(4) the requirement that they include the reference to fact

sheets when they must disclose the R-value explanatory statement or

the savings claim explanatory statement under sections 460.18(a) or

460.19(b), respectively.

The exemptions for new home sellers also apply to home

insulation sellers other than new home sellers when they participate

with a new home seller to advertise and promote the sale of new

homes, provided that the primary thrust of the advertisement or

other promotional material is the promotion of new homes, and not

the promotion of the insulation product. 48 FR 31192 (1983).

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 96-7528 Filed 3-27-96; 8:45 am]

BILLING CODE 6750-01-P