Agency Information Collection Activities; Submission for OMB Review; Comment Request

FEDERAL TRADE COMMISSION

Agency Information Collection Activities; Submission for OMB

Review; Comment Request

AGENCY: Federal Trade Commission.

ACTION: Notice.

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SUMMARY: The Federal Trade Commission (FTC) has submitted to the Office

of Management and Budget (OMB) for review and clearance under the

Paperwork Reduction Act information collection requirements contained

in its Appliance Labeling Rule (``Rule''), promulgated pursuant to the

Energy Policy and Conservation Act of 1975 (``EPCA''). OMB

provisionally extended the expiration for clearance from September 30,

1998 to March 31, 1999. The FTC proposes that OMB extend its approval

for the Rule an additional three years from the prior expiration date

of September 30, 1998.

DATES: Comments must be submitted on or before April 1, 1999.

ADDRESSES: Send written comments to: Secretary, Federal Trade

Commission,

[[Page 10148]]

Room H-159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580. All

comments should be identified as responding to this notice.

FOR FURTHER INFORMATION CONTACT: Requests for additional information or

copies of the proposed information requirements should be addressed to

James Mills, Attorney, Bureau of Consumer Protection, Division of

Enforcement, Room 4616, Federal Trade Commission, 601 Pennsylvania

Ave., NW, Washington, D.C. 20580 (202-326-3035).

SUPPLEMENTARY INFORMATION: The FTC has submitted a request to OMB to

extend the existing clearance to collect information associated with

the Appliance Labeling Rule. A Federal Register Notice with a 60-day

comment period soliciting comments on this collection of information

was published on December 29, 1998 (63 FR 71645). No comments were

received.

Description of the collection of information and proposed use: The

Rule requires manufacturers of major household appliances

(refrigerators, freezers, water heaters, clothes washers, dishwashers,

window air conditioners, furnaces, central air conditions, and heat

pumps) to disclose energy consumption and water usage data relating to

those appliances. The Rule establishes testing, reporting,

recordkeeping, and labeling requirements for these disclosures. The

Rule's testing and disclosure requirements enable consumers purchasing

appliances to compare the energy use of efficiency of competing models.

In addition, EPCA and the Rule require manufacturers to submit relevant

data to the Commission regarding energy or water usage in connection

with the products they manufacture. The Commission uses this data to

compile the ranges of comparability for covered appliances for

publication in the Federal Register. The Commission may use

submissions, along with required records for testing data, for

comparison purposes in enforcement actions involving alleged

misstatements on labels or in advertisements.

Estimated annual hours burden: Section 324 of EPCA and the

Commission's Rule impose burdens for testing (620,713 hours); reporting

(1,178 hours); recordkeeping (789 hours); labeling (91,735 hours); and

retail catalog disclosures (de minimis). The total burden for these

activities is 715,000 hours (rounded).

The following estimates of the time needed to comply with the

requirements of the Rule are based on census data, Department of Energy

figures and estimates, general knowledge of manufacturing practices,

and trade association advice and figures. Because the burden of

compliance falls almost entirely on manufacturers and importers (with a

de minimis burden relating to retailers), burden estimates are

calculated on the basis of the number of domestic manufacturers and/or

the number of units shipped domestically in the various product

categories.

A. Testing

Under the Rule, manufacturers of covered products must test each

basic model they produce to determine energy usage (or, in the case of

plumbing fixtures, water consumption). The burden imposed by this

requirement is determined by the number of basic models produced, the

average number of units tested per model, and the number of hours

required to conduct the applicable test. The figures for numbers of

basic models that staff received from the industry represent all of the

basic models in a given product category.

Manufacturers need not subject each basic model to testing

annually; they must retest only if the product design changes in such a

way as to affect energy consumption. However, industry representatives

state that manufacturers generally test each model at least once a

year. Staff have conservatively assumed that this annual testing means

all basic models were either replaced or subject to design changes

during the year that necessitated testing under the Rule. The burden

estimates in this Notice, which assume annual testing for all models,

are accordingly conservative and likely are somewhat overstated to the

extent manufacturers are actually carrying out annual tests for reasons

unrelated to the Rule. The testing burden for the different categories

of products covered by the Rule is estimated as follows:

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Avg. number of Total annual

Category of manufacturer Number of units tested Hours per unit testing burden

basic models per model tested hours

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Refrigerators, Refrigerator-freezers, and 360 2 4 2,880

Freezers.......................................

Dishwashers..................................... 78 2 1 156

Clothes washers................................. 150 2 2 600

Water heaters................................... 650 2 24 31,200

Room air conditioners........................... 520 2 8 8,320

Furnaces........................................ 1,900 2 8 30,400

Central A/C..................................... 1,095 2 24 52,560

Heat pumps...................................... 831 2 72 119,664

Pool heaters.................................... 75 2 12 1,800

Fluorescent lamp ballasts....................... 975 4 3 11,700

Lamp products................................... 2,100 12 14 352,800

Plumbing fittings............................... 1,700 2 2 6,800

Plumbing fixtures............................... 22,000 1 .0833 1,833

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620,713

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B. Reporting

Reporting burden estimates are based on information from industry

representatives. Manufacturers of some products, such as appliances and

HVAC equipment (furnaces, boilers, central air conditioners, and heat

pumps), indicate that, for them, the reporting burden is best measured

by the estimated time required to report on each model manufactured,

while others, such as makers of fluorescent lamp ballasts and lamp

products, state that an estimated number of annual burden hours by

manufacturer is a more meaningful way to measure. The figures below

reflect these different methodologies as well as the varied burden hour

estimates provided to staff by manufacturers of the different product

categories that use the latter methodology.

[[Page 10149]]

Appliances, HVAC Equipment, and Pool Heaters

Staff estimate that the average reporting burden for these

manufacturers is approximately two minutes per basic model. Based on

this estimate, multiplied by a total of 5,659 basic models of these

products, the annual reporting burden for the appliance, HVAC

equipment, and pool heater industry is an estimated 188 hours (2

minutes x 5,659 models 60 minutes per hour).

Fluorescent Lamp Ballasts, Lamp Products, and Plumbing Fixtures

The total annual reporting burden for manufacturers of fluorescent

lamp ballasts, lamp products, and plumbing fixtures is based on the

estimated average annual burden for each category of manufacturers,

multiplied by the number of manufacturers in each respective category,

as shown below:

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Annual burden Total annual

Category of manufacturer hours per Number of reporting

manufacturer manufacturers burden hours

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Fluorescent lamp ballast........................................ 6 20 120

Lamp products................................................... 15 50 750

Plumbing fixtures............................................... 1 120 120

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Total Reporting Burden Hours

The total reporting burden for industries covered by the Rule is

1,178 hours annually (188+120+750+120).

C. Recordkeeping

EPCA and the Commission's Rule require manufacturers to keep

records of the test data generated in performing the tests to derive

information included on labels and required by the Rule. As in Section

B., above, burden is calculated by number of models for appliances,

HVAC equipment, and pool heaters, and by number of manufacturers for

fluorescent lamp ballasts, lamp products, and plumbing fixtures.

Appliances, HVAC Equipment, and Pool Heaters

The recordkeeping burden for manufacturers of appliances, HVAC

equipment, and pool heaters varies directly with the number of tests

performed. The total number of tests performed for these product

categories, based on the number of basic models within each category

and the average number of units tested per model, is 11,318. Staff

estimate total recordkeeping burden of approximately 189 hours for

these manufacturers, based on an estimated average of one minute per

record stored (whether in electronic or paper format), multiplied by

11,318 tests performed annually

(1 x 11,31860 minutes per hour).

Fluorescent Lamp Ballasts, Lamp Products, and Plumbing Fixtures

The total annual recordkeeping burden for manufacturers of

fluorescent lamp ballasts, lamp products, and plumbing fixtures is

based on the estimated average annual burden for each category of

manufacturers (derived from industry sources), multiplied by the number

of manufacturers in each respective category, as shown below:

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Annual burden Total annual

Category of manufacturer hours per Number of recordkeeping

manufacturer manufacturers burden hours

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Fluorescent lamp ballasts....................................... 2 20 40

Lamp products................................................... 10 50 500

Plumbing fixtures............................................... .5 120 60

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Total Recordkeeping Burden Hours

The total recordkeeping burden for industries covered by the Rule

is 789 hours annually (189+40+500+60).

D. Labeling

EPCA and the Rule require that manufacturers of covered products

provide certain information to consumers, through labels, fact sheets,

or permanent markings on the products. The burden imposed by this

requirement consists of (1) the time needed to prepare the information

to be provided, and (2) the time needed to provide it, in whatever

form, with the products. The applicable burden for each category of

products is described below:

Appliances, HVAC Equipment, and Pool Heaters

EPCA and the Rule specify the content, format, and specifications

for the required labels, so manufacturers need only add the energy

consumption figures derived from testing. In addition, most larger

companies use automation to generate labels, and the labels do not

change from year to year. Given these considerations, staff estimate

that the time to prepare labels for appliances, HVAC equipment, and

pool heaters is no more than four minutes per basic model. Thus, for

appliances, HVAC equipment, and pool heaters, the approximate annual

drafting burden involved in labeling is 377 hours per year [5,659 (all

basic models) x four minutes (drafting time per basic model

60 (minutes per hour)]

Industry representatives and trade associations have estimated that

it takes between 4 and 8 seconds to affix each label to each product.

Based on an average of six seconds per unit, the annual burden for

affixing labels to appliances, HVAC equipment, and pool heaters is

74,222 hours [six (seconds) x 44,533,465 (the number of total

products shipped in 1997) divided by 3,600 (seconds per hour)].

The Rule also requires that HVAC equipment manufacturers disclose

energy usage information on a separate fact sheet or in an approved

industry-prepared directory of products. Staff have estimated the

preparation of these fact sheets requires approximately 30 minutes per

basic model. Manufacturers producing at least 95 percent of the

affected equipment, however, are members of trade associations that

produce approved directories (in connection with their certification

programs independent of the Rule) that

[[Page 10150]]

satisfy the fact sheet requirement. Thus, the drafting burden for fact

sheets for HVAC equipment is approximately 96 hours annually [3,826

(all basic models) x .5 hours x .05 (proportion of equipment for

which fact sheets are required)].

The Rule allows manufacturers to prepare a compendium of fact

sheets for each retail establishment as long as there is a fact sheet

for each basic model sold. Assuming that six HVAC manufacturers (i.e.,

approximately 5% of HVAC manufacturers), produce fact sheets instead of

having required information shown in industry directories, and each

spends approximately 16 hours per year distributing the fact sheets to

retailers and in response to occasional consumer requests, the total

time attributable to this activity would also be approximately 96

hours.

The total annual labeling burden for appliances, HVAC equipment,

and pool heaters is 377 hours for preparation plus 74,222 hours for

affixing, or 74,599 hours. The total annual fact sheet burden is 96

hours for preparation and 96 hours for distribution, or 192 hours. The

total annual burden for labels and fact sheets for the appliance, HVAC,

and pool heater industries is, therefore, estimated to be 74,791 hours

(74, 599 x 192).

Fluorescent Lamp Ballasts

The statute and the Rule require that labels for fluorescent lamp

ballasts contain an ``E'' within a circle. Since manufacturers label

these ballasts in the ordinary course of business, the only impact of

the Rule is to require manufactures to reformat their labels to include

the ``E'' symbol. Thus the burden imposed by the Rule for labeling

fluorescent lamp ballasts is de minimis.

Lamp Products

The burden imposed for labeling of lamp products is also de

minimis, for similar reasons. The Rule requires certain disclosures on

packaging for lamp products. Since manufacturers were already

disclosing the substantive information required under the Rule prior to

its implementation, the practical effect of the Rule was to require

that manufactures redesign packaging materials to ensure they include

the disclosures in the manner and form prescribed by the Rule. Because

this effort is now complete, there is no ongoing labeling burden

imposed by the Rule for lamp products.

Plumbing Fixtures

The statute and the Rule require that manufacturers disclose the

water flow rate for plumbing fixtures. Manu-

facturers may accomplish this disclosure by attaching a label to the

product, through permanent markings imprinted on the product as part of

the manufacturing process, or by including the required information on

packaging material for the product. While some methods might impose

little or no additional incremental time burden and cost on the

manufacturer, other methods (such as affixing labels) could. Thus,

staff estimate an overall blended average burden associated with this

disclosure requirement of one second per unit sold. Staff also estimate

that there are approximately 9,000,000 covered fixtures and 52,000,000

fittings sold annually in the country. Therefore, the estimated annual

burden to label plumbing fixtures is 16,944 hours [61,000,000 (units)

x 1 (seconds) 3,600 (seconds per hour)].

Total Burden for Labeling

The total labeling burden for all industries covered by the Rule is

91,735 hours (74,791+16,944) annually.

E. Retail Sales Catalogs Disclosures

The Rule requires that sellers offering covered products through

retail sales catalogs (i.e., those publications from which a consumer

can actually order merchandise) disclose in the catalog energy (or

water) consumption for each covered product. Because this information

is supplied by the product manufacturers, the burden on the retailer

consists of incorporating the information into the catalog

presentation.

Staff estimate that there are approximately 100 sellers who offer

covered products through retail catalogs. While the Rule initially

imposed a burden on catalog sellers by requiring that they draft

disclosures and incorporate them into the layouts of their catalogs,

catalog sellers now have substantial experience with the Rule and its

requirements. Energy and water consumption information has obvious

relevance to consumers, so sellers are likely to disclose much of the

required information with or without the Rule. Accordingly, given the

small number of catalog sellers, their experience with incorporating

energy and water consumption data into their catalogs, and the

likelihood that many of the required disclosures would be made in the

ordinary course of business, staff believe that any burden the Rule

imposes on catalog sellers is de minimis.

Estimated annual cost burden: $16,479,000 ($13,351,000 in labor

costs and $3,128,000 in non-labor costs).

Labor Costs: Staff have derived labor costs by applying appropriate

estimated hourly cost figures to the burden hours described above. In

calculating the cost figures, staff have estimated that test procedures

are conducted by skilled technical personnel at an hourly rate of

$20.00, and that recordkeeping and reporting, as well as labeling,

marking, and preparation of fact sheets, are, on average, done by

clerical personnel at a rate of $10.00 per hour.

On this basis, the total annual labor costs for the five different

categories of burden under the Rule, as applied to all the products

covered by the Rule, is $13,351,000 (rounded), which is derived as

follows:

1. $12,414,260 for testing all products covered by the Rule, based

on 620,713 hours [620,713 x $20.00 per hour].

2. $11,780 for complying with the reporting requirements of the

Rule, based on 1,178 hours [1,178 x $10.00 per hour].

3. $7,890 for complying with the recordkeeping requirements of the

Rule, based on 789 hours [789 x $10.00 per hour].

4. $917,350 for complying with the labeling, marking, and fact

sheet requirements of the Rule, based on 91,735 hours [91,735 x $10.00

per hour].

5. De minimis for retail catalog disclosures, for the reasons

previously noted with respect to burden hours.

Capital or other non-labor costs: $3,127,500 ($2,500 for reporting

requirements and $3,125,000 for labeling requirements), rounded to

$3,128,000.

In considering how to estimate the capital or other non-labor costs

associated with compliance with the Rule, staff have examined the five

distinct burdens imposed by EPCA through the Rule--testing, reporting,

recordkeeping, labeling, and retail catalog disclosures--as they affect

the 11 groups of products that the Rule covers. Staff have concluded

that there are no current start-up costs associated with the Rule.

Manufacturers have in place the capital equipment necessary--especially

equipment to measure energy and/or water usage--to comply with the

Rule.

Manufacturers that submit required reports to the Commission

directly (rather than through trade associations) incur some nominal

costs for paper and postage. Staff estimates that these costs do not

exceed $2,500. Manufacturers must also incur the cost of procuring

labels and fact sheets used in compliance with the Rule. Based on

estimates of 44,533,465 units shipped

[[Page 10151]]

and 109,500 fact sheets prepared,\1\ at an average cost of seven cents

for each label or fact sheet, the total (rounded) labeling cost is

$3,125,000.

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\1\ The units shipped total is based on combined actual or

estimated industry figures for 1997 across all of the product

categories, except for fluorescent lamp ballasts, lamp products, and

plumbing fixtures. Staff has determined that, for those product

categories, there are little or no costs associated with the

labeling requirements. The fact sheet estimation is based on the

previously noted assumption that five percent of HVAC manufacturers

produce fact sheets on their own. Based on total HVAC units shipped

(8,759,907), five percent amounts to 437,995 HVAC units. Because

manufacturers generally list more than one unit on a fact sheet,

staff have estimated that manufacturers independently preparing them

will use one sheet for every four of these 437,995 units. Thus,

staff estimate that HVAC manufacturers produce approximately 109,500

fact sheets.

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Debra A. Valentine,

General Counsel.

[FR Doc. 99-5095 Filed 3-1-99; 8:45 am]

BILLING CODE 6750-01-M