Deceptive Use of ``Leakproof,'' ``Guaranteed Leakproof,'' Etc., as Descriptive of Dry Cell Batteries

FEDERAL TRADE COMMISSION

16 CFR Part 403

Deceptive Use of ``Leakproof,'' ``Guaranteed Leakproof,'' Etc.,

as Descriptive of Dry Cell Batteries

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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

announces the commencement of a rulemaking proceeding for the Trade

Regulation Rule on Deceptive Use of ``Leakproof,'' ``Guaranteed

Leakproof,'' Etc., as Descriptive of Dry Cell Batteries (``the Dry Cell

Battery Rule'' or ``the Rule''), 16 CFR Part 403. The proceeding will

address whether or not the Dry Cell Battery Rule should be repealed.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 September 18,

1997. Notifications of interest in testifying must be submitted on or

before September 18, 1997. 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 September 18, 1997, 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

and Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2506.

Comments and requests to testify should be identified as ``16 CFR Part

403 Comment--Dry Cell Battery Rule'' and ``16 CFR Part 403 Request to

Testify--Dry Cell Battery 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:

Neil Blickman, Attorney, Federal Trade Commission, Bureau of Consumer

Protection, Division of Enforcement, Sixth and Pennsylvania Ave., NW.,

Washington, DC 20580, (202) 326-3038.

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

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(``NPR'') the Commission initiates a proceeding to consider whether the

Dry Cell Battery 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.

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\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 Committee on Commerce, United States House of

Representatives, 30 days prior to its publication in the Federal

Register.

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II. Background Information

On May 20, 1964, the Commission promulgated a trade regulation rule

that states that in connection with the sale of dry cell batteries in

commerce, the use of the word ``leakproof,'' the term ``guaranteed

leakproof,'' or any other word or term of similar import, or any

abbreviation thereof, in advertising, labeling, marking or otherwise,

as descriptive of dry cell batteries, constitutes an unfair method of

competition and an unfair or deceptive act or practice in violation of

section 5 of the FTC Act (16 CFR 403.4). This Rule was based on the

Commission's finding that, despite efforts by dry cell battery

manufacturers to eliminate electrolyte leakage, battery leakage and

damage therefrom occurs from the use to which consumers ordinarily

subject dry cell batteries.

The Rule provides that manufacturers or marketers are not

prohibited from offering or furnishing guarantees that provide for

restitution in the event of damage from battery leakage, provided no

representation is made, directly or indirectly, that dry cell batteries

will not leak (16 CFR 403.5). The Rule further provides that in the

event any person develops a new dry cell battery that he believes is in

fact leakproof, he may apply to the Commission for an amendment to the

Rule, or other appropriate relief (16 CFR 403.6).

The Commission conducted an informal review of industry practices

by examining the advertising, labeling and marking of dry cell

batteries available for retail sale. This review revealed no

representations that the batteries were leakproof. The Commission's

review, therefore, indicated general compliance with the Rule's

provisions. Moreover, the Commission has no record of receiving any

complaints regarding non-compliance with the Rule, or of initiating any

law enforcement actions alleging violations of the Rule.

Additionally, the Commission's review indicated general voluntary

compliance by the industry with the requirements of American National

Standards Institute (``ANSI'') Standard C18.1M-1992 Dry Cells and

Batteries--Specifications. The ANSI standard contains specifications

for dry cell batteries, and requirements for labeling the products and

their packages. The ANSI standard requires the following information to

be printed on the outside of each battery (when necessary, the standard

permits some of this information to be applied to the unit package):

(1) the name or trade name of the manufacturer; (2) the ANSI/National

Electronic Distributors Association number, or some other identifying

designation; (3) year and month, week or day of manufacture, which may

be a code, or the expiration of a guarantee period, in a clear readable

form; (4) the nominal voltage; (5) terminal polarity; and (6) warnings

or cautionary notes where applicable.\2\

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\2\ See section 8.1 of ANSI Standard C18.1M-1992.

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The ANSI standard recommends that dry cell battery manufacturers

and sellers include on their products and packages several battery user

guidelines and warnings that are relevant to this proceeding. They are:

(1) although batteries basically are trouble-free products, conditions

of abuse or misuse can cause leakage; (2) failure to replace all

batteries in a unit at the same time may result in battery leakage; (3)

mixing batteries of various chemical systems, ages, applications, types

or manufacturers may result in poor device performance and battery

leakage; (4) attempting to recharge a non-rechargeable battery is

unsafe because it could cause leakage; (5) reverse insertion of

batteries may cause charging, which may result in leakage; (6) devices

that operate on either household current or battery power may subject

batteries to a charging current, which may cause leakage; (7) do not

store batteries or battery-powered equipment in high-temperature areas;

and (8) do not dispose of batteries in fire.\3\ At a minimum, each dry

cell battery and battery package inspected by Commission staff informed

consumers that the batteries may explode or leak if recharged, inserted

improperly, disposed of in fire, or mixed with different battery types.

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\3\ See section 7.5 of ANSI Standard C18.1M-1992.

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Based on the foregoing, on March 25, 1997, the Commission published

an Advance Notice of Proposed Rulemaking (``ANPR'') tentatively

concluding that industry members that comply with the ANSI standard's

point-of-sale disclosure requirements, of necessity, also are in

compliance with the Rule. Accordingly, the Commission tentatively

determined that the Dry Cell Battery Rule is no longer necessary, and

sought comments on the proposed repeal of the Rule.\4\

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\4\ 62 FR 14050.

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The only comment received in response to the ANPR was submitted by

the National Electrical Manufacturers Association (``NEMA''), a trade

association representing all major U.S. manufacturers of dry cell

batteries.\5\ NEMA supports repeal of the Commission's Dry Cell Battery

Rule, indicating that it has been superseded effectively in the

marketplace by ANSI Standard C18.1M-1992.\6\

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\5\ The comment submitted in response to the ANPR has been

placed on the public record, and is filed as document number

B21969700001. In today's notice, the comment is cited as NEMA, #1.

\6\ NEMA, #1.

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Accordingly, after reviewing the comment submitted, and in light of

ANSI Standard C18.1M-1992, the Commission has determined that the Dry

Cell Battery Rule is no longer necessary.\7\ The Commission, therefore,

seeks comments on the proposed repeal of the Dry Cell Battery Rule.

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\7\ Repealing the Dry Cell Battery Rule would eliminate the

Commission's ability to obtain civil penalties for any future

misrepresentations that dry cell batteries are leakproof. The

Commission, however, has tentatively determined that repealing the

Rule 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 under section 5 of the FTC Act, 15

U.S.C. 45, either administratively or through Section 13(b) actions,

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

serious misrepresentations in district court allows the Commission

to obtain injunctive relief as well as equitable remedies, such as

redress or disgorgement.

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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, using 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)

[[Page 44101]]

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 required 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, Sixth St. and

Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2222.

Questions

(1) Should the Dry Cell Battery Rule be kept in effect, or should

it be repealed?

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

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

consumers?

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

experienced by firms that must comply with the Rule?

(5) Are ``leakproof'' or ``guaranteed leakproof'' representations a

significant problem in the marketplace?

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

regulations, or private industry standards, that eliminate the need for

the Rule?

(7) Does the existence of ANSI Standard C18.1M-1992 for Dry Cell

Batteries eliminate or greatly lessen the need for the Rule?

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. 601-12, requires

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

Rule on small businesses.\8\ 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.

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\8\ 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.

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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.

For 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 Dry Cell Battery Rule imposes no third-party disclosure

requirements that constitute ``information collection requirements''

under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Since 1964,

therefore, the Rule has imposed no paperwork burdens on marketers of

dry cell batteries. In any event, repeal of the Dry Cell Battery Rule

would permanently eliminate any burdens on the public imposed by the

Rule.

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

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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.

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

List of Subjects in 16 CFR Part 403

Advertising, Dry cell batteries, Labeling, Trade practices.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 97-21922 Filed 8-18-97; 8:45 am]

BILLING CODE 6750-01-M