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: Final rule; removal.

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

announces the repeal of 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 rulemaking record, changes in industry practice, and

general voluntary compliance by the industry with the requirements of

an American National Standards Institute standard for dry cell

batteries, which has provisions similar to the Rule's, indicate that

the Dry Cell Battery Rule is no longer necessary or in the public

interest and should be repealed. This document contains a Statement of

Basis and Purpose for repeal of the rule.

EFFECTIVE DATE: November 17, 1997.

ADDRESSES: Requests for copies of the Statement of Basis and Purpose

should be sent to the Public Reference Branch, Room 130, Federal Trade

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

20580.

FOR FURTHER INFORMATION CONTACT:

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

Protection, Division of Enforcement, Sixth Street and Pennsylvania

Ave., N.W., Washington, DC 20580, (202) 326-3038.

SUPPLEMENTARY INFORMATION:

Statement of Basis and Purpose

I. Background

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 marketing 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. See section 8.1 of ANSI Standard

C18.1M-1992.

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;

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and (8) do not dispose of batteries in fire. See section 7.5 of ANSI

Standard C18.1M-1992. 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.

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 also comply 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 until April 24, 1997. 62 FR 14050.

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.\1\ NEMA supported 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.\2\

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\1\ The comment submitted in response to the ANPR was placed on

the public record, and filed as document number B21969700001. In

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

\2\ NEMA, #1.

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After reviewing the comment submitted in response to the ANPR, and

in light of ANSI Standard C18.1M-1992, on August 19, 1997, 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, the

Commission published a Notice of Proposed Rulemaking (``NPR'')

initiating a proceeding to consider whether the Dry Cell Battery Rule

should be repealed or remain in effect (62 FR 44099).\3\ This

rulemaking proceeding was undertaken as part of the Commission's

ongoing program of evaluating trade regulation rules and industry

guides to ascertain their effectiveness, impact, cost and need. This

proceeding also responded to President Clinton's National Regulatory

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

eliminate obsolete or unnecessary regulations. In the NPR, the

Commission announced its determination, pursuant to 16 CFR 1.20, to use

expedited procedures in this proceeding.\4\ The NPR comment period

closed on September 18, 1997. The Commission received no comments and

no requests to hold an informal hearing.

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\3\ In accordance with section 18 of the FTC Act, 15 U.S.C. 57a,

the Commission submitted the 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.

\4\ These procedures included: publishing a Notice of Proposed

Rulemaking; soliciting written comments on the Commission's proposal

to repeal the Rule; holding an informal hearing, if requested by

interested parties; receiving a final recommendation from Commission

staff; and announcing final Commission action in the Federal

Register.

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II. Basis for Repeal of Rule

The Commission has decided to repeal the Dry Cell Battery Rule for

the reasons discussed in the NPR. In sum, the Commission has reviewed

the rulemaking record and determined that the practices that brought

about the Rule, labeling or advertising dry cell batteries as being

``leakproof,'' are no longer common industry practices. In addition,

general voluntary compliance by the industry with the requirements of

ANSI Standard C18.1M-1992 Dry Cells and Batteries--Specifications

assures compliance with the Rule. Although 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 has determined that, in these circumstances,

repealing the Rule would not impair 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. Accordingly, the Commission hereby announces the repeal

of the Dry Cell Battery Rule.

III. Regulatory Flexibility Act

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

an analysis of the anticipated impact of the repeal of the rule on

small businesses. The reasons for repeal of the Rule have been

explained in this notice. Repeal of the rule would appear to have

little or no effect on small businesses. Moreover, the Commission is

not aware of any existing federal laws or regulations that would

conflict with repeal of the Dry Cell Battery Rule. Further, no comments

suggested any adverse effect on small business from repeal. For these

reasons, the Commission certifies, pursaunt to section 605 of the RFA,

5 U.S.C. 605, that this action will not have a significant economic

impact on a substantial number of small entities.

IV. 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

will permanently eliminate any burdens on the public imposed by the

Rule.

List of Subjects in 16 CFR Part 403

Advertising, Dry cell batteries, Labeling, Trade practices.

PART 403--[REMOVED]

The Commission, under authority of Section 18 of the Federal Trade

Commission Act, 15 U.S.C. 57a, amends chapter I of title 16 of the Code

of Federal Regulations by removing Part 403.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 97-30111 Filed 11-14-97; 8:45 am]

BILLING CODE 6750-01-M