Appliance Labeling Rule, 78057-78066 [06-9901]
Download as PDF
<![CDATA[
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
[FR Doc. E6–21954 Filed 12–27–06; 8:45 am]
BILLING CODE 4910–13–P
FEDERAL TRADE COMMISSION
16 CFR Part 305
RIN 3084–AA74
Appliance Labeling Rule
Federal Trade Commission
(‘‘FTC’’ or ‘‘Commission’’).
ACTION: Final rule.
AGENCY:
cprice-sewell on PROD1PC66 with RULES
SUMMARY: The Energy Policy Act of 2005
directs the Commission to issue labeling
requirements for the electricity used by
ceiling fans to circulate air. The
Commission is publishing amendments
to the Appliance Labeling Rule that
establish energy labeling requirements
for these products.
DATES: The amendments published in
this final rule will become effective on
January 1, 2009.
ADDRESSES: Requests for copies of this
document are available from: Public
Reference Branch, Room 130, Federal
Trade Commission, 600 Pennsylvania
Avenue, NW., Washington, DC 20580.
The complete record of this proceeding
is also available at that address.
Relevant portions of the proceeding,
including this document, are available
at https://www.ftc.gov.
FOR FURTHER INFORMATION CONTACT:
Hampton Newsome, (202) 326–2889,
Attorney, Division of Enforcement,
Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania
Avenue, NW., Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
Section 324 of the Energy Policy and
Conservation Act of 1975 (‘‘EPCA’’) (42
U.S.C. 6291–6309), as amended,
requires the FTC to prescribe labeling
rules for the disclosure of estimated
annual energy cost, or alternative energy
consumption information, for a variety
of products covered by the statute,
including home appliance, lighting, and
plumbing products.1 The Commission’s
Appliance Labeling Rule (‘‘the Rule’’)
(16 CFR part 305) implements the
requirements of EPCA by directing
manufacturers to disclose energy
information about major household
appliances. This information enables
consumers to compare the energy use or
efficiency of competing models.2 When
initially published in 1979,3 the Rule
1 42
U.S.C. 6294.
information about the Rule can be found
at https://www.ftc.gov/appliances.
3 44 FR 66466 (Nov. 19, 1979).
2 More
VerDate Aug<31>2005
15:20 Dec 27, 2006
Jkt 211001
applied to eight appliance categories:
refrigerators, refrigerator-freezers,
freezers, dishwashers, water heaters,
clothes washers, room air conditioners,
and furnaces. The Commission
subsequently expanded the Rule’s
coverage to include central air
conditioners, heat pumps, fluorescent
lamp ballasts, plumbing products,
lighting products, pool heaters, and
some other types of water heaters.4
Congress enacted the Energy Policy
Act of 2005 (‘‘EPACT 2005’’) directing
the Commission to require energy
labeling for ceiling fans.5 Pursuant to
this directive, on June 21, 2006, the
Commission published a notice of
proposed rulemaking (‘‘NPRM’’) seeking
public comment on proposed fan
labeling requirements (71 FR 35584).
Before discussing the comments
received in response to the NPRM and
the Commission’s final requirements for
ceiling fan labeling, this Notice
describes the provisions of EPACT 2005,
ceiling fan uses, ENERGY STAR
specifications, and existing state
labeling programs.
A. Energy Policy Act of 2005
Section 137 of EPACT 2005 (Pub. L.
No. 109–58 (2005)) amends EPCA to
include new requirements related to
ceiling fans. Section 324(a)(2)(G)(i) of
EPCA (42 U.S.C. 6294(a)(2)(G)(i))
requires the Commission to ‘‘issue, by
rule, in accordance with this section,
labeling requirements for the electricity
used by ceiling fans to circulate air in
a room.’’ The statute also directs the
Department of Energy (‘‘DOE’’) to
prescribe test procedures and energy
conservation standards for ceiling fans.6
(See 42 U.S.C. 6293(b)(16) and 42 U.S.C.
6295(v)). According to EPACT 2005, the
test procedure for ceiling fans must be
based on the ‘‘ENERGY STAR Testing
Facility Guidance Manual: Building a
Testing Facility and Performing the
Solid State Test Method for ENERGY
STAR Qualified Ceiling Fans, Version
1.1’’ (‘‘ENERGY STAR Guidance
Manual’’) published by the
Environmental Protection Agency
(EPA). (42 U.S.C. 6293(b)(16)). However,
4 See 52 FR 46888 (Dec. 10, 1987) (central air
conditioners); 59 FR 49556 (Sept. 28, 1994) (pool
heaters); 54 FR 28031 (July 5, 1989) (fluorescent
lamp ballasts); 58 FR 54955 (Oct. 25, 1993) (certain
plumbing products); and 59 FR 25176 (May 13,
1994) (lighting products).
5 Section 137 of EPACT 2005 (Pub. L. 109–58
(2005)).
6 EPACT 2005 (42 U.S.C. 6295(ff)) further directs
DOE to require that all ceiling fans manufactured
after January 1, 2007 have fan speed controls
separate from any lighting controls, adjustable
speed controls (either more than one speed or
variable speed), and reversible fan action capability
(except for some exempted categories).
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
78057
in issuing testing and conservation
standards, DOE may exempt or set
different standards for certain product
classes if the primary standards are not
technically feasible or economically
justified. DOE may also establish
separate or exempted product classes for
highly decorative fans for which air
movement performance is a secondary
design feature. (42 U.S.C. 6295(v)). DOE
published a final test procedure for
ceiling fans on December 8, 2006 (71 FR
71430) based on the ENERGY STAR
Guidance Manual.
In developing labeling rules for
products covered by EPCA (such as
ceiling fans), the Commission must
follow the requirements set out in
section 324(c) (42 U.S.C. 6294(c)).7
Under section 324(c), labels must
disclose the estimated annual operating
cost determined in accordance with
DOE test procedures unless otherwise
indicated in the law. The Commission,
however, may require a different
measure of energy consumption if DOE
determines that the cost disclosure is
not technologically feasible or the
Commission determines such a
disclosure is not likely to assist
consumers in making purchasing
decisions or is not economically
feasible. (42 U.S.C. 6294(c)(1)(A)). In
addition, labels must disclose
information about the range of operating
costs (or a different measure of energy
consumption if required by the
Commission). (42 U.S.C. 6294(c)(1)(B)).
The Commission’s labeling rules also
must include a description of the
applicable type or class of covered
product, information about the range of
operating costs (or energy use), a
description of applicable test
procedures, a prototype label, and
directions for displaying the label. (42
U.S.C. 6294(c)(2)).
Additionally, EPCA authorizes the
Commission to require the disclosure of
energy information found on the label in
any printed material displayed or
distributed at the point of sale. (42
U.S.C. 6293(c)(4)). The Commission also
may direct manufacturers to provide
additional energy-related disclosures on
the label (or information shipped with
the product), including instructions for
the maintenance, use, or repair of the
7 EPACT 2005 did not amend the list of covered
products in EPCA section 322 (42 U.S.C. 6292) to
include the new products added by the legislation
such as ceiling fans, exit signs, and torchieres.
Nevertheless, language elsewhere in EPACT 2005
(e.g., section 137(b)) makes it clear that Congress
intended to treat these items as covered products.
Accordingly, the Commission believes that ceiling
fans are subject to EPCA requirements for covered
products, such as energy range disclosures on labels
required by section 324(c) and the reporting
requirements of section 326(b).
E:\FR\FM\28DER1.SGM
28DER1
78058
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
covered product. (42 U.S.C. 6293(c)(5)).
Finally, section 326(b) of EPCA contains
certain reporting requirements for
covered products. (42 U.S.C. 6296).
B. Ceiling Fan Uses
According to DOE, 69.6 million U.S.
households (or 65.1%) had ceiling fans
in 2001.8 Ceiling fans can improve the
comfort of a home by circulating air to
create a draft throughout a room. For
homes using air conditioning, a ceiling
fan allows consumers to raise the
thermostat setting about 4°F with no
reduction in comfort. In temperate
climates, or during moderately hot
weather, ceiling fans may allow
consumers to avoid using air
conditioning altogether. A larger fan
blade provides comparable cooling at a
lower velocity than a smaller blade.
DOE recommends a 36- or 44-inch
diameter fan to cool a room of up to 225
square feet, while fans that are 52 inches
or more should be used in larger
rooms.9 In the winter, by reversing the
blade direction and operating at low
speed, ceiling fans can provide a gentle
updraft, which forces warm air near the
ceiling down into the occupied space.10
cprice-sewell on PROD1PC66 with RULES
C. ENERGY STAR Specifications
As mentioned above, the statute
requires manufacturers to derive the
energy information on ceiling fan labels
from DOE tests, which must be based on
the ENERGY STAR Guidance Manual.
The ENERGY STAR program,
administered by EPA and DOE, is a
voluntary government labeling program
that identifies high efficiency products.
Ceiling fans that move air at least 20%
more efficiently, on average, than
standard models qualify for the
ENERGY STAR label. The program also
has minimum airflow and airflow
efficiency requirements for qualifying
models.11
ENERGY STAR requires participating
manufacturers to conduct tests and selfcertify those product models that meet
the ENERGY STAR guidelines.
Manufacturers must derive airflow and
airflow efficiency measurements using
the Solid State Test Method as defined
8 See Energy Information Administration, Office
of Energy Markets and End Use, 2001 Residential
Energy Consumption Survey, https://
www.eia.doe.gov/emeu/recs/ceilingfans/
ceiling_fan.html.
9 See https://www.eere.energy.gov/consumer/
your_home/space_heating_cooling/index.cfm/
mytopic=12355.
10 See https://www.energystar.gov/
index.cfm?c=ceiling_fans.pr_ceiling_fans_usage.
11 Airflow is the rate of air movement at a specific
fan setting expressed in cubic feet per minute
(‘‘CFM’’). Airflow efficiency is the ratio of airflow
divided by power consumed by the motor and
controls at a specific ceiling fan setting expressed
in CFM per watt (‘‘CFM/Watt’’).
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
in the ENERGY STAR Guidance
Manual.12 Under this method, testing
personnel place the fan above a large
diameter tube in a standard temperature
and humidity-controlled room. The air
delivered by the fan passes through the
tunnel where velocity sensors mounted
on a rotating arm measure the airflow at
various points. ENERGY STAR directs
manufacturers to measure efficiency at
each of three fan speeds (low, medium,
and high). For example, to meet
ENERGY STAR standards, at low speed,
fans must have a minimum airflow of
1,250 CFM and an efficiency of 155
CFM/Watt and, at high speed, fans must
have a minimum airflow of 5,000 CFM
and an efficiency of 75 CFM/Watt.
ENERGY STAR also requires
manufacturers to label the packages of
qualifying products with airflow, fan
power, consumption, and airflow
efficiency at three operating speeds.
D. California Energy Commission
In addition to the ENERGY STAR
specifications and test method, the State
of California has requirements for
ceiling fans. Under the California
regulations, each ceiling fan package
must display, in characters no less than
1/4 inch high, the unit’s airflow (in
CFM) and airflow efficiency (in CFM/
Watt) at low, medium, and high speeds.
The requirements only apply to fans
with diameters of 50 inches or greater.
(Cal. Code Regs. tit. 20, § 1607(d)(7)).
California regulations do not specify the
necessary test procedures.
II. Summary of Final Rule
Requirements
Consistent with the Commission’s
June 21, 2006 NPRM, the Final Rule
requires ceiling fan manufacturers to
label their product packages with: (1)
The fan’s airflow at high speed in CFM;
(2) the fan’s power consumption in
watts at high speed; (3) the fan’s airflow
efficiency in CFM/Watt at high speed;
and (4) a range of airflow efficiencies at
high speed for standard-sized fans on
the market as published by the
Commission. To obtain this information,
manufacturers will have to test their
fans pursuant the procedures required
by DOE Appendix U to Subpart B of 10
CFR part 430. The Final Rule requires
manufacturers to provide this
information on a label affixed to the
product packaging as well as in paper
and online catalogs. The Rule also
requires manufacturers to submit
reports to the Commission with high
speed airflow, power consumption, and
airflow efficiency information for the
12 ENERGY STAR Testing Facility Guidance
Manual, Version 1.1 (Dec. 9, 2002).
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
applicable models pursuant to EPCA’s
reporting requirements. (42 U.S.C.
6296). By statute, the Rule does not
apply to fans produced before January 1,
2009.
III. Final Rule Issues and Comments
Received on Proposed Rule
The Commission received four
comments in response to its June 21,
2006 NPRM.13 Generally, the comments
supported the FTC’s proposed
requirements. The Commission has
made a few minor changes to the
proposed rule based on comments and
additional information. In general,
however, the Final Rule is substantially
similar to that proposed in the NPRM.
The following sections describe the
changes made to the proposed rule,
concerns raised by the comments, and
other issues related to the final
requirements.
A. Changes to Proposed Rule
The Commission has made six minor
changes to the proposed language. First,
we added a sentence to the reporting
requirements in § 305.8(a)(1) to clarify
that efficiency ratings, electricity
consumption, and capacity for ceiling
fans must be provided at high speed and
that manufacturers must report fan size
(measured by diameter in inches).
Second, we have added a sentence to
the description of the term ‘‘ceiling fan’’
in section 305.5 to clarify that the Rule
does not apply to products for which
DOE has no test procedure. Third, we
included efficiency range information in
§ 305.11(g)(1)(E)&(F). Fourth, in
response to comments, we clarified
§ 305.11(g)(2) to indicate that the label’s
text shall be black with a white
background and clarified that the term
‘‘placement’’ refers to placement of text
within the label. Fifth, § 305.11(g) in the
Final Rule indicates that the label’s text
size and content, and the order of the
required disclosures shall be consistent
with Ceiling Fan Label Illustration of
Appendix L of Part 305. Sixth, we have
changed the language in the catalog
requirement in § 305.14 to clarify that
the required information must be
disclosed clearly and conspicuously.
B. Test Procedures
Under EPCA (42 U.S.C. 6294(c)),
manufacturers must determine the
energy performance of their products
pursuant to standard DOE test
13 American Lighting Association (‘‘ALA’’) (09/
08/2006) #523596–00003; People’s Republic of
China (‘‘PRC’’) (09/08/2006) #523596–00001;
Hunter Fan Company (‘‘Hunter Fan’’) (09/11/2006)
#523596–00002; and The Home Depot (10/23/06)
(late-filed) #523596–00005.
E:\FR\FM\28DER1.SGM
28DER1
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
procedures.14 As mentioned earlier in
this Notice, DOE published final test
procedures for ceiling fans on December
8, 2006. (71 FR 71340). EPACT 2005
directs the Commission to issue a
labeling rule within 18 months after the
Act’s passage and also indicates that
such labeling rules cannot be applied to
products manufactured before January
1, 2009. (42 U.S.C. 6294(a)(2)(G)).
Accordingly, in compliance with
EPACT 2005, the Commission is issuing
the Rule now with an effective date of
January 1, 2009.
C. Operating Costs
Section 324(c) of EPCA (42 U.S.C.
6294(c)) requires that labels for covered
products contain operating-cost
information unless the Commission
determines that such a disclosure is not
likely to assist consumers in making
purchasing decisions or is not
economically feasible. As discussed in
the NPRM, the Commission believes
that annual operating costs are not
likely to assist consumers because
ceiling fan use is likely to vary
significantly depending on factors such
as climate, household heating and
cooling systems, and individual use. We
also note that the DOE test procedure
does not contain sufficient information
to allow manufacturers to calculate
annual operating costs. No comments
raised objections to the Commission’s
proposal in this regard. Accordingly, the
Final Rule does not require operating
costs on ceiling fans.
cprice-sewell on PROD1PC66 with RULES
D. Content of Label
In the NPRM, the Commission
proposed using three descriptors, each
of which provides different information
about the fan. Electricity use (in watts)
provides information about the power
drawn by the fan and allows consumers
to compare the fan’s energy use to other
household items such as light bulbs.
Electricity use information also provides
an idea of how much the fan will cost
to operate because the higher the
wattage, the higher the operating costs.
Electricity use does not, however,
provide information about the amount
of air the fan can move. For example, a
fan that uses very little electricity may
not create air movement adequate for a
consumer’s needs.
The Commission’ NPRM, therefore,
also proposed requiring that each label
14 In its comments, the PRC suggested that the
required test method should be international
standard IEC 60879–1986 and raised additional
questions about the test procedure. EPCA charges
DOE with the responsibility for setting test
procedures. In the case of ceiling fans, Congress has
mandated that DOE base its test on the existing
ENERGY STAR procedure.
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
contain airflow and airflow efficiency
information. The airflow rating
describes the fan’s capacity, that is, the
amount of air the fan will move in
CFM—the greater the CFM, the more air
the model will move. The airflow
efficiency, expressed in CFM/Watt
indicates the amount of air the product
will move for each watt of electricity
used. This efficiency information
describes the relationship between the
product’s energy use and its output, not
necessarily the electricity used by the
product. In its comments, Hunter Fan
agreed that the three proposed
descriptors are required to provide
‘‘consumers with the necessary
information to make an informed
purchase.’’ It noted that CFM
information is necessary because it
provides consumers with information
about whether a particular model will
move sufficient air for large rooms. No
comments opposed these disclosures.
Based on the comments and the
reasoning detailed above, the
Commission continues to believe that
all three disclosures should be included
on the label. As discussed in the NPRM,
the use of a single descriptor does not
appear to be adequate because each
single descriptor fails, by itself, to
convey sufficient information to explain
fully the product’s energy performance.
As discussed above, electricity use does
not provide information about fan
output. Similarly, the efficiency rating is
not necessarily an accurate predictor of
the fan’s electricity consumption or its
operating cost. Where there is
significant variation in the airflow of
competing models, the label should not
suggest that high efficiency necessarily
equates with cost savings.15
Accordingly, the Commission is
requiring the inclusion of all three
pieces of information on the label.
The Final Rule also limits the
disclosures to high-speed settings in
order to simplify the information on the
label.16 The Commission expects that
the information at high speed will be
adequate to allow consumers to
compare the efficiency rating and power
consumed by competing models. The
15 Because airflow efficiency is the ratio of airflow
(i.e., fan strength) to power consumption, a less
efficient model may deliver less air but, at the same
time, use less electricity and thus cost less to
operate. For example, a model with an efficiency
rating of 100 CFM/Watt, 6,000 CFM airflow, and 60
watts power consumption will use more electricity
and thus cost more to operate than a fan with a
lower efficiency rating of 91 CFM/Watt, 5,000 CFM
airflow, and power consumption of 55 watts.
16 We have added a sentence to the reporting
requirements in § 305.8(a)(1) to clarify that
efficiency ratings, electricity consumption, and
capacity for ceiling fans must be provided at high
speed.
PO 00000
Frm 00027
Fmt 4700
Sfmt 4700
78059
inclusion of information for other speed
settings would clutter the label with few
additional benefits. In its comments,
Hunter Fan Company indicated that
‘‘showing total wattage used on high
speed is a good general comparison tool
for consumers to understand the
electricity used relative to other devices
in the home.’’ It also observed ‘‘that as
long as the ceiling fan has a high CFM/
Watt rating, then the fan will be more
efficient on whichever speed is used.’’
The ALA explained that high speed is
‘‘the true unregulated performance of
the fan’’ and that capacitors, inserted by
manufacturers to control medium and
low speeds, are set at values determined
by each individual manufacturer. In
addition, as proposed in the NPRM, the
label must contain a money-saving tip
reminding consumers to turn off their
fans when they leave a room.17 No
comments opposed the content of the
proposed label disclosures.
E. Additional Performance Information
(Including ENERGY STAR Information)
Under the Final Rule, manufacturers
have the discretion to provide
additional energy information elsewhere
on the package or in marketing
information. This information could
include airflow efficiencies, power
consumption in watts, and airflow at
other speeds as long as such information
is adequately substantiated and fairly
represents the results of the applicable
test procedure. To ensure that all fan
packages feature a uniform energy label,
however, the Rule limits the
information allowed on the required
label. A uniform label on every ceiling
fan package should make it easier for
consumers to locate and compare
information for different models as they
shop.
Both Hunter Fan and ALA supported
the proposal to require a consistent,
uniform label. ALA, however, noted that
ENERGY STAR-qualified fans are
currently marked with an energy
performance label required by the
ENERGY STAR program. ALA urged
that manufacturers be able to use the
ENERGY STAR label on qualified
products, in lieu of the FTC label. An
exception for such a large portion of the
market, however, would dilute the
benefits of a uniform label. It may also
imply to some consumers that fans
bearing the FTC label are lower in
efficiency, which may not be the case
given the voluntary nature of the
ENERGY STAR program. In addition,
the absence of the FTC-required label on
17 This is intended to help consumers understand
that fans provide no cooling benefit in an
unoccupied room.
E:\FR\FM\28DER1.SGM
28DER1
78060
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
ENERGY STAR fans could create
general confusion because some models
would have the FTC label and others
would not. Accordingly, the Final Rule
does not exempt ENERGY STAR
models. Manufacturers who choose to
participate in ENERGY STAR can
continue to provide the ENERGY STAR
performance data elsewhere on the
product package in accord with the
ENERGY STAR guidelines.
cprice-sewell on PROD1PC66 with RULES
F. Efficiency Ranges
In its NPRM, the Commission sought
comment on the range of efficiency
numbers that should be used in the
statement proposed on the label (e.g.,
‘‘Compare: 49’’ to 60’’ ceiling fans have
airflow efficiencies ranging from
approximately ltol cubic feet per
minute per watt at high speed.’’). The
Commission proposed to include two
separate ranges in the Rule, one for fans
with blade sizes between 36’’ to 48’’ and
another for 49’’ to 60.’’ Unfortunately,
the comments did not provide data that
could be used to develop such ranges.
The Commission staff, therefore, has
reviewed data from several sources,
including online information from the
California Energy Commission (https://
www.energy.ca.gov/appliances/
appliance/), EPA’s
ENERGYSTAR program (https://
www.energystar.gov/index.
cfm?c=ceiling_fans.pr_ceiling_fans), and
various manufacturer and retail
websites. Based on this data, the
Commission is publishing the following
ranges for placement on the label: 71 to
86 CFM/Watt at high speed for fans with
blade sizes between 36’’ to 48’’ and 51
to 176 CFM/Watt at high speed for fans
with blade sizes between 49’’ to 60’’
ceiling fans. (See §§ 305.11(g)(1)(E)&(F)).
The Commission will revisit these
ranges if data submissions in the future
indicate that the required ranges are
substantially different than the ranges of
efficiency used by fans in the
marketplace.
In its comments, the PRC suggested
that the energy efficiency range should
be dynamic and published periodically.
As stated in the NPRM, the Commission
did not propose a detailed system of
range information because it is unclear
whether such information would
provide consumer benefits
commensurate with the costs associated
with the necessary label changes. The
Commission has not reviewed evidence
that would change this view. As
discussed above, however, the
Commission will consider changes in
the future if the actual efficiency ranges
of products in the market place diverge
substantially from the published ranges.
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
G. Location of Label
Under the Final Rule, manufacturers
must place the ceiling fan label on
product packages rather than on the
products themselves. This requirement
should assist consumers shopping in
retail stores. Both Hunter Fan and ALA
agreed. Hunter Fan explained that
consumers would have a difficult time
reading labels affixed to the products
themselves because floor models are
typically positioned in the store eight to
nine feet off the floor. The PRC
suggested that the money-saving tip on
the label be placed on the ceiling fan’s
switch box. This suggestion raises cost,
feasibility, and consistency questions
that have not been explored in this
proceeding. Accordingly, we are not
requiring such marking in the Final
Rule. We note, however, that nothing
prohibits manufacturers from marking
their products with this information
voluntarily.
H. Size and Format Requirements
The NPRM proposed certain size and
format requirements for the label. As
with the proposed rule, the Final Rule
requires that the label must be at least
four inches wide and three inches high.
Under the Final Rule, the text font shall
be Arial or another equivalent font, and
the label’s text size and content, and the
order of the required disclosures shall
be consistent with Ceiling Fan Label
Illustration of Appendix L of Part 305.18
The proposed rule did not specify the
background color for the label. ALA
suggested that, ‘‘for labels integrated
into the carton’s printing plate, the
nomenclature shall be black on a
contrasting background.’’ While we
understand manufacturers’ desire to
incorporate background package colors
on the label, we believe that this may
detract from providing a consistent,
recognizable label across all competing
models to facilitate comparison
shopping. Therefore, we have clarified
the Final Rule language to indicate that
label must be in black text with a white
background.
I. Request for Exemptions
ALA suggested that the Commission
grant an exemption for high speed axial
ceiling fans with contoured blades and
ceiling fans with multiple fan
assemblies because the current ENERGY
STAR test procedure (which serves as
the basis for DOE’s procedure) is not a
suitable test for these types of products.
18 The
proposed rule indicated that the sample
illustration in the Appendix provided ‘‘suggested’’
font sizes. The language in the Final Rule provides
more definitive instructions for preparing the label
and should help ensure that the label is consistent
in appearance from product to product.
PO 00000
Frm 00028
Fmt 4700
Sfmt 4700
Similarly, the PRC urged the
Commission to exempt highly
decorative fans for which air movement
is the secondary design feature.
EPACT 2005 provides a definition of
‘‘ceiling fan’’ and directs the
Commission to issue a labeling rule for
products fitting that definition. The
statute defines ‘‘ceiling fan’’ as ‘‘a
nonportable device that is suspended
from a ceiling for circulating air via the
rotation of fan blades.’’ (42 U.S.C.
6291(49)). We have identified no basis
for determining that the model types
identified by commenters fall outside of
this definition, and the law does not
provide the Commission with explicit
authority to make wholesale exemptions
from the labeling requirement for
different types or models of fans that
otherwise fall within the statute’s
definition. Accordingly, the basis for
exempting these whole product
categories from the labeling rule is at
best unclear.
At the same time, the FTC’s Rule
requires that manufacturers test their
products using the DOE-approved
procedure. In some cases, that
procedure may not be appropriate
because it may not be possible to test
certain fan types under the required test
apparatus or required conditions. In
other cases, the test may yield energy
information that is not a valid source of
comparison across fan types. Labeling in
these circumstances could yield
confusing or misleading results for
consumers or could simply be
impossible. Therefore, if DOE
determines that its test procedure does
not apply to certain types or models of
ceiling fans, then the Commission will
not expect manufacturers to label those
products.19 The final definition of
‘‘ceiling fan’’ indicates that the
requirements of the rule are limited to
those ceiling fans for which the
Department of Energy has adopted and
published test procedures for measuring
energy usage. The Commission itself,
however, is not issuing labeling
exemptions for any ceiling fan types or
models at this time.
J. Catalog Disclosures
Section 305.14 of the Rule currently
requires that any manufacturer,
distributor, retailer, or private labeler
who advertises a covered product in a
catalog, including a website, must
provide the information required by
19 We note that the statute authorizes DOE to
issue exemptions for certain product classes if the
primary standards are not technically feasible or
economically justified and to establish separate or
exempted product classes for highly decorative fans
for which air movement performance is a secondary
design feature. (42 U.S.C. 6295(v)).
E:\FR\FM\28DER1.SGM
28DER1
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
section 305.11(g)(1) (i.e., airflow,
electricity usage, airflow efficiency, and
range information) on the website and
in the catalogs. Because ceiling fans are
covered products, the Final Rule
amends these catalog requirements to
include ceiling fans. Pursuant to the
Final Rule, the required information
should appear on each page that lists
the covered product (see § 305.14(e)).20
cprice-sewell on PROD1PC66 with RULES
K. Reporting Requirements
Consistent with EPCA (42 U.S.C.
6296), the NPRM contained certain
reporting requirements for ceiling fans
consistent with those applicable to other
products covered by the Rule. For
example, the statute requires
manufacturers to submit annual reports
to the FTC listing energy data for each
model under current production (42
U.S.C. 6296(b)(4)).
Consistent with the proposed rule, the
Final Rule will require manufacturers to
submit: Information on the energy
efficiency of ceiling fans, the model
numbers for each basic model, the total
energy consumed, the number of tests
performed, and the capacity (i.e., cubic
feet per minute). The Rule also requires
the submission of an annual report for
all models under production on March
1st of each year (beginning in 2009). In
addition, pursuant to section 305.8(c) of
the Rule, manufacturers must submit
data for new models prior to their
distribution. The Final Rule contains an
additional sentence in 305.8(a)(1)
clarifying that manufacturers must
report the diameter of models in inches
and efficiency ratings, electricity
consumption, and capacity at high
speed. The diameter information (i.e.,
fan-blade size) will allow the FTC to
group the fan data into the range of
comparability categories established by
the Rule (e.g., 49 to 60 inch fans).
The PRC asked several questions
related to the process for the submission
of data to the FTC. The FTC staff
provides guidance regarding the
submission of data at https://
www.ftc.gov/bcp/conline/edcams/
eande/faq.htm. The FTC accepts data
submissions in a variety of formats,
including paper and email. Most
manufacturers submit data via email
using the spreadsheet files provided by
the staff at the website. In addition,
under the FTC’s Rule, it is not necessary
to obtain third-party accreditation.
L. Miscellaneous Issues
ALA urged that the Commission
exempt ceiling fans intended for export.
20 We have also changed the language in the
catalog requirement in § 305.14 to clarify that the
required information must be disclosed clearly and
conspicuously.
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
We note that EPCA’s consumer labeling
requirements (and thus the Rule’s
requirements) do not apply to covered
products manufactured for export and
identified as such (see 42 U.S.C. 6300).
ALA also mentioned that some models
may have different motors because
many manufacturers have multiple
sources of supply for a given model.
ALA asked whether the multiple
sources of information should be
disclosed to the consumer. Under the
Rule, manufacturers must test and label
each model following DOE standard test
procedures. As a general matter, the
energy performance of models sold on
the market should be consistent with
the results of the models tested. Section
305.6 of the Commission’s Rule requires
that any representation with respect to
energy consumption measures derived
from the DOE test must be based upon
DOE’s sampling procedures set forth in
10 CFR 430.24, subpart B.
IV. Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act (‘‘PRA’’), as amended, 44
U.S.C. 3501, et seq., the Commission
submitted the proposed Rule to the
Office of Management and Budget
(‘‘OMB’’) for review. OMB approved the
Rule’s information collection
requirements through August 31, 2009
(OMB Control No. 3084–0069). Changes
made to the Rule subsequent to
publication of the NPRM have not
affected the Commission’s previous
burden estimate. Nonetheless, as
discussed below, the Commission has
revised its previous burden estimate
based on data available from the
California Energy Commission and the
ENERGY STAR program, as well as, a
comment received from ALA. As
required by the PRA, the Commission
has submitted its revised burden
estimate to OMB for review.
As set forth in the NPRM, the Rule
contains disclosure and reporting
requirements that constitute
‘‘information collection requirements’’
as defined by 5 CFR 1320.7(c), the
regulation that implements the
Paperwork Reduction Act (‘‘PRA’’).21
Specifically, the Rule expands the scope
of pre-existing recordkeeping, labeling,
and reporting requirements to include
manufacturers for a product not
previously covered, ceiling fans.
The Commission’s burden estimates
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
21 44
PO 00000
U.S.C. 3501–3520.
Frm 00029
Fmt 4700
Sfmt 4700
78061
importers (with a de minimis burden
relating to retailers), the Commission
has calculated the burden estimates
based on the number of ceiling fan units
shipped domestically.
Annual Hours Burden
The Commission estimates that there
are 2,500 basic models (i.e., units with
essentially identical functional physical
and electrical characteristics) of ceiling
fans sold in the U.S. 22 Consistent with
reporting estimates for other products
covered by the Rule, the Commission
estimates that the average reporting
burden for manufacturers will be
approximately two minutes per basic
model. Accordingly, the estimated
annual reporting burden for ceiling fans
is approximately 83 hours (2 minutes ×
2,500 models ÷ 60 minutes per hour).
With regard to labeling burdens,
manufacturers will require
approximately four minutes to create a
label for each basic model. Thus, the
approximate annual drafting burden
involved in labeling is 167 hours per
year [2,500 basic models × four minutes
(average drafting time per basic model)
÷ 60 minutes per hour]. In addition, the
Commission estimates that it will take,
on average, six seconds to place labels
on the packaging of each unit. Based on
2004 U.S. census data, the Commission
estimates that there are approximately
6,000,000 ceiling fan units shipped each
year in the U.S. Thus, the annual
burden for affixing labels to ceiling fans
is approximately 10,000 hours [six
(seconds) × 6,000,000 (the total products
shipped in 2004) divided by 3,600
(seconds per hour)]. Accordingly, the
total annual labeling burden would be
approximately 10,167 hours.
With regard to testing burdens,
manufacturers will require
approximately three hours to test each
new basic model. The FTC estimates
that, on average, 50% of the total basic
models are tested each year.
Accordingly, the estimated annual
testing burden would be approximately
3,750 hours [1 hour × 3 (average number
of tests run per model) × 1,250 (50% of
2,500 basic models)].23
The Rule also requires ceiling fan
manufacturers to keep records of test
data generated in performing the tests to
derive information included on labels.
The Commission estimates that it will
take ceiling fan manufacturers one
22 The Commission’s previous estimate of basic
models as stated in the NPRM (1,500) has been
modified to reflect ceiling fan data available from
the California Energy Commission and the ENERGY
STAR program.
23 The Commission’s previous estimate of two fan
tests per model has been increased to three tests per
model based on comments provided by ALA.
E:\FR\FM\28DER1.SGM
28DER1
cprice-sewell on PROD1PC66 with RULES
78062
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
minute per record (i.e., per model) to
store the data. Accordingly, the
estimated annual recordkeeping burden
would be approximately 42 hours (1
minute × 2,500 basic models ÷ 60
minutes per hour).
In addition, the Rule requires sellers
offering ceiling fan products through
retail sales catalogs (i.e., those
publications from which a consumer
can actually order merchandise) to
disclose energy information for each fan
model in the catalog. Because this
information is supplied by the product
manufacturers, the burden on the
retailer consists of incorporating the
information into the catalog
presentation.
Based upon staff research concerning
the number of manufacturers and online
retailers of ceiling fans, the Commission
estimates that there are an additional
200 catalog sellers of ceiling fans (paper
catalogs and online sellers) who are
subject to the Rule’s catalog disclosure
requirements. The Commission
estimates that these sellers each require
approximately 17 hours per year to
incorporate the data into their catalogs.
This estimate is based on the
assumption that entry of the required
information takes on average one
minute per covered product and an
assumption that the average online
catalog contains approximately 1,000
covered products. Given that there is
great variety among sellers in the
volume of products that they offer
online, it is very difficult to estimate
such numbers with precision. In
addition, this analysis assumes that
information for all 1,000 products is
entered into the catalog each year. This
is a conservative assumption because
the number of incremental additions to
the catalog from year to year is likely to
be much lower after initial start-up
efforts have been completed. Thus, the
total annual disclosure burden for all
catalog sellers of ceiling fans covered by
the Rule is 3,400 hours (200 sellers × 17
hours annually).
Thus, the Commission now estimates
that the total annual burden due to the
inclusion of ceiling fans under the scope
of the Rule will be 17,000 hours (83
hours for reporting + 167 hours for
drafting labels + 10,000 hours for
affixing labels + 3,750 hours for testing
+ 42 hours for recordkeeping + 3,400
disclosure hours for catalog sellers),
rounded to the nearest thousand.24
24 This is a 2,000 hour increase from the
Commission’s previous burden estimate as stated in
the NPRM.
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
Annual Labor Costs
The Commission has derived labor
costs by applying appropriate estimated
hourly cost figures to the burden hours
described above. In calculating the cost
figures, the FTC assumes that test
procedures, recordkeeping and
reporting, marking, and preparation of
fact sheets are conducted by electrical
engineers at an hourly rate of $40.59.25
In addition, we assume labeling will be
conducted by skilled clerical personnel
at an hourly rate of $14.21.
Based on the above estimates and
assumptions, the total annual labor cost
for the five different categories of
burden under the Rule, applied to
ceiling fans, is derived as follows: (1)
annual testing labor cost is
approximately $152,213 (3,750 hours ×
$40.59 (electrical engineer wage
category)); and (2) annual labor costs for
recordkeeping, reporting, and catalog
disclosures are approximately $149,858
(3,692 hours × $40.59 (electrical
engineer wage category)); and (3) annual
labor cost for labeling will be $142,100
(10,000 hours × $14.21 (skilled clerical
wage category)).26 Thus, the total annual
labor cost is approximately $444,000
rounded to the nearest thousand.
Annual Non-labor Costs
In its previous submission to OMB,
Commission staff examined the five
distinct burdens imposed by the
proposed Rule—testing, reporting,
recordkeeping, labeling, and retail
catalog disclosures—as they affect nonlabor costs incurred by manufacturers
and catalog sellers of ceiling fans. The
manufacturers and retailers who make
the required disclosures in catalogs
already are producing catalogs in the
ordinary course of business;
accordingly, capital costs associated
with such disclosures would be de
minimis. Nonetheless, ceiling fan
manufacturers that submit required
reports to the Commission directly
(rather than through trade associations)
incur some nominal costs for paper and
25 The ALA comment indicated that all
recordkeeping, reporting, and fact sheet preparation
will be conducted by engineering personnel at a
rate of $40.59 per hour. The hourly rate of $40.59
is based on data recently released by the U.S.
Department of Labor’s Bureau of Labor Statistics.
See https://www.bls.gov/ncs/ocs/sp/ncbl0757.pdf.
Accordingly, the Commission has modified its
previous assumption that such work would be
conducted by skilled technical personnel at an
hourly rate of $29.40.
26 In response to the NPRM, ALA further
commented that a cost estimate for testing from one
of the three certified facilities is $1,785 per fan. The
Commission assumes that labor costs make up only
a portion of this estimate. Accordingly, the
additional cost for testing proposed by ALA is
addressed in the non-labor costs section of this
document.
PO 00000
Frm 00030
Fmt 4700
Sfmt 4700
postage. Ceiling fan manufacturers must
also incur the cost of procuring labels.
The Commission retains staff’s previous
estimate that ceiling fan manufacturers
will incur approximately $420,500 for
such costs.27 However, as discussed
below, the Commission has decided to
revise staff’s previous non-labor cost
estimate to take into account additional
costs associated with testing.
The ALA comment indicated ceilingfan manufacturers will contract with
third-party labs to test their products.
According to ALA, manufacturers incur
a testing cost of $1,785 per ceiling fan
at such labs. The Commission believes
this calculation overestimates the cost
because it does not account for price
adjustments based on high-volume
testing orders, and it assumes that all
manufacturers will use third-party
labs.28 Therefore, the Commission
estimates that manufacturers will incur
testing costs of $1,000 per ceiling fan.
The Commission further estimates that
approximately $120 of that cost is
attributed to labor.29 Accordingly, the
Commission estimates that the average
annual non-labor cost associated with
testing will be $1,100,000 [($880 (nonlabor test cost per fan) × 1,250 (number
of basic models tested per year)].
ALA’s comment also indicated that
manufacturers must dispose of tested
units. Assuming that, on average, 50%
of the basic models are tested each year,
the Commission estimates that the
annual capital cost of disposal to be
$750,000 ($200 disposal cost per fan ×
3 tests per fan × 1,250 basic models
tested each year). ALA also indicated
that manufacturers incur costs for
shipping fans to third party test labs at
an average of $9 per model. Although
such costs are not incurred by
manufacturers which do their own
testing, the Commission conservatively
estimates that the cost for shipping fans
to third-party test labs will be $11,250
($9 per fan × 1,250 models).
Accordingly, the total annual nonlabor cost imposed by the Rule, as
applied to ceiling fans, will be
approximately $2,282,000, rounded to
27 This estimate is comprised of an estimated 6
million ceiling fan units shipped in the U.S. each
year (based on 2004 U.S. census data) at an average
cost of seven cents per label plus approximately
$500 in nominal paper and postage costs.
28 At least one large ceiling fan manufacturer has
its own testing facility. See https://
www.energystar.gov/ia/partners/manuf_res/
cflabs.pdf.
29 As discussed above, the Commission estimates
manufacturers will require approximately three
hours to test each new basic model. Assuming an
electrical engineer performs the test at an hourly
wage rate of $40.59, the Commission estimates that
approximately $120 of the total testing cost
incurred by ceiling fan manufacturers is
appropriately categorized as a labor cost.
E:\FR\FM\28DER1.SGM
28DER1
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
137 of EPACT 2005 amends section 324
of EPCA to require the Commission to
‘‘issue, by rule, in accordance with this
section, labeling requirements for the
electricity used by ceiling fans to
circulate air in a room.’’
V. Regulatory Flexibility Act
The Regulatory Flexibility Act
(‘‘RFA’’), 5 U.S.C. 601–612, requires that
the Commission provide an Initial
Regulatory Flexibility Analysis
(‘‘IRFA’’) with a proposed Rule and a
Final Regulatory Flexibility Analysis
(‘‘FRFA’’), if any, with the Final Rule,
unless the Commission certifies that the
Rule will not have a significant
economic impact on a substantial
number of small entities. See 5 U.S.C.
603–605.
The Commission believes it likely that
the amendments will not have a
significant economic impact on a
substantial number of small entities.
The Commission estimates that these
requirements will apply to about 95
ceiling-fan manufacturers and an
additional 200 online and paper catalog
sellers of ceiling fans. We expect that
about two-thirds of these entities will
qualify as small businesses under the
relevant thresholds (i.e., 750 or fewer
employees). As detailed in the previous
section of this notice, the requirements
will impose testing, recordkeeping, and
labeling requirements on affected
entities. The Commission expects that,
in some cases, the Rule will have
significant impact on individual small
businesses, particularly those that
manufacturer a large number of different
fan models. The actual number of small
businesses experiencing such impacts,
however, is not likely to be substantial.
Accordingly, this document serves as
notice to the Small Business
Administration of the FTC’s
certification of no effect. Although the
Commission certifies under the RFA
that the Rule proposed in this notice
would not, if promulgated, have a
significant impact on a substantial
number of small entities, the
Commission has determined,
nonetheless, that it is appropriate to
publish an IRFA in order to inquire into
the impact of the proposed Rule on
small entities. Therefore, the
Commission has prepared the following
analysis:
cprice-sewell on PROD1PC66 with RULES
the nearest thousand ($420,000 for
procuring labels + $500 for nominal
paper and postage costs + $1,100,000 for
testing + $750,000 for disposal costs +
$11,250 for shipping to third-party test
labs).
B. Significant Issues Raised By Public
Comment
A. Need For and Objectives of the Rule
The Federal Trade Commission is
charged with enforcing the requirements
of 42 U.S.C. 6294, which require the
agency to issue this Rule. The objective
of the proposed Rule is to establish
energy labeling requirements for the
movement of air by ceiling fans. Section
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
No significant issues were raised by
public comment related to small
business impacts.
C. Small Entities To Which the Final
Rule Will Apply
Under the Small Business Size
Standards issued by the Small Business
Administration, household fan
manufacturers qualify as small
businesses if they have fewer than 750
employees. The Commission estimates
that fewer than 200 entities subject to
the proposed Rule’s requirements
qualify as small businesses.
D. Projected Reporting, Recordkeeping,
and Other Compliance Requirements
The Commission recognizes that the
labeling rule will involve some
increased costs for affected parties. Most
of these costs will be in the form of
product testing and drafting costs for the
label. These costs are detailed in the
Paperwork Reduction Act section of this
notice. The entities affected will include
ceiling fan manufacturers and catalog
retailers (including online sellers). The
Commission does not expect that there
will be any significant legal,
professional, or training costs to comply
with the Rule. The Commission does
not expect that the labeling
requirements will impose significant
incremental costs for Web sites or other
advertising.
E. Alternatives Considered
The provisions of the Rule directly
reflect the requirements of the statute,
and thus leave little room for significant
alternatives to decrease the burden on
regulated entities. One commenter,
ALA, urged the Commission to accept
data from models already tested under
the ENERGY STAR program without
requiring additional 95% confidence
level testing as generally required by
DOE. Under the enabling statute, the
energy information disclosed on the
label must be based on the test
procedures in DOE’s regulations. If DOE
determines that such additional testing
is not required or necessary for ENERGY
STAR ceiling fans, the Commission will
defer to DOE.
PO 00000
Frm 00031
Fmt 4700
Sfmt 4700
78063
VI. Final Rule Language
List of Subjects in 16 CFR Part 305
Advertising, Energy conservation,
Household appliances, Labeling,
Reporting and recordkeeping
requirements.
For the reasons set out above, the
Commission amends 16 CFR Part 305 as
follows:
I
PART 305—[AMENDED]
1. The authority citation for part 305
continues to read as follows:
I
Authority: 42 U.S.C. 6294.
2. Amend § 305.2 by revising
paragraph (i), revising paragraph (o)(21),
and adding paragraph (o)(22) to read as
follows:
I
§ 305.2
Definitions.
*
*
*
*
*
(i) Energy efficiency rating means the
following product-specific energy usage
descriptors: annual fuel utilization
efficiency (AFUE) for furnaces; energy
efficiency ratio (EER) for room air
conditioners; seasonal energy efficiency
ratio (SEER) for the cooling function of
central air conditioners and heat pumps;
heating seasonal performance factor
(HSPF) for the heating function of heat
pumps; airflow efficiency for ceiling
fans; and, thermal efficiency (TE) for
pool heaters, as these descriptors are
determined in accordance with tests
prescribed under section 323 of the Act
(42 U.S.C. 6293). These product-specific
energy usage descriptors shall be used
in satisfying all the requirements of this
part.
*
*
*
*
*
(o) * * *
(21) Ceiling fans.
(22) Any other type of consumer
product which the Department of
Energy classifies as a covered product
under section 322(b) of the Act (42
U.S.C. 6292).
*
*
*
*
*
3. Amend § 305.3 by adding paragraph
(s) to read as follows:
I
§ 305.3
Description of covered products.
*
*
*
*
*
(s) Ceiling fan means a nonportable
device that is suspended from a ceiling
for circulating air via the rotation of fan
blades. The requirements of this part are
limited to those ceiling fans for which
the Department of Energy has adopted
and published test procedures for
measuring energy usage.
I 4. Add § 305.5(a)(11) to read as
follows:
E:\FR\FM\28DER1.SGM
28DER1
78064
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
§ 305.5 Determinations of estimated
annual energy consumption, estimated
annual operating cost, and energy
efficiency rating, and of water use rate.
(a) * * *
(11) Ceiling Fans—§ 430.23.
*
*
*
*
*
I 5. Add § 305.7(l) to read as follows:
§ 305.7
Determinations of capacity.
*
*
*
*
*
(l) Ceiling fans. The capacity shall be
the airflow in cubic feet per minute as
determined according to appendix U of
10 CFR part 430, subpart B.
I 6. Amend § 305.8 to revise paragraphs
(a)(1) and (b)(1) to read as follows:
§ 305.8
Submission of data.
(a)(1) Each manufacturer of a covered
product (except manufacturers of
fluorescent lamp ballasts, showerheads,
faucets, water closets, urinals, general
service fluorescent lamps, medium base
compact fluorescent lamps, or general
service incandescent lamps including
incandescent reflector lamps) shall
submit annually to the Commission a
report listing the estimated annual
energy consumption (for refrigerators,
refrigerator-freezers, freezers, clothes
washers, dishwashers and water
heaters) or the energy efficiency rating
(for room air conditioners, central air
conditioners, heat pumps, furnaces,
ceiling fans, and pool heaters) for each
basic model in current production,
determined according to § 305.5 and
statistically verified according to
§ 305.6. The report must also list, for
each basic model in current production:
the model numbers for each basic
model; the total energy consumption,
determined in accordance with § 305.5,
used to calculate the estimated annual
energy consumption or energy
efficiency rating; the number of tests
performed; and, its capacity, determined
in accordance with § 305.7. For those
models that use more than one energy
source or more than one cycle, each
separate amount of energy consumption
or energy cost, measured in accordance
with § 305.5, shall be listed in the
report. Appendix K illustrates a
suggested reporting format. Starting
serial numbers or other numbers
identifying the date of manufacture of
covered products shall be submitted
whenever a new basic model is
introduced on the market. For ceiling
fans, the report shall contain the fan
diameter in inches and also shall
contain efficiency ratings, energy
consumption, and capacity at high
speed.
*
*
*
*
*
(b)(1) All data required by § 305.8(a)
except serial numbers shall be
submitted to the Commission annually,
on or before the following dates:
Deadline for data
submission
Product category
Refrigerators .................................................................................................................................................................................
Refrigerator-freezers ....................................................................................................................................................................
Freezers .......................................................................................................................................................................................
Central air conditioners ................................................................................................................................................................
Heat pumps ..................................................................................................................................................................................
Dishwashers .................................................................................................................................................................................
Water heaters ...............................................................................................................................................................................
Room air conditioners ..................................................................................................................................................................
Furnaces ......................................................................................................................................................................................
Pool heaters .................................................................................................................................................................................
Clothes washers ...........................................................................................................................................................................
Fluorescent lamp ballasts ............................................................................................................................................................
Showerheads ...............................................................................................................................................................................
Faucets .........................................................................................................................................................................................
Water closets ...............................................................................................................................................................................
Urinals ..........................................................................................................................................................................................
Ceiling fans ..................................................................................................................................................................................
Fluorescent lamps ........................................................................................................................................................................
Medium Base Compact Fluorescent Lamps ................................................................................................................................
Incandescent Lamps, incl. Reflector Lamps ................................................................................................................................
*
*
*
*
*
7. Revise § 305.10(a) to read as
follows:
I
cprice-sewell on PROD1PC66 with RULES
§ 305.10 Ranges of estimated annual
energy consumption and energy efficiency
ratings.
(a) The range of estimated annual
energy consumption or energy
efficiency ratings for each covered
product (except fluorescent lamp
ballasts, showerheads, faucets, water
closets, urinals, or ceiling fans) shall be
taken from the appropriate appendix to
this rule in effect at the time the labels
are affixed to the product. The
Commission shall publish revised
ranges annually in the Federal Register,
if appropriate, or a statement that the
specific prior ranges are still applicable
for the new year. Ranges will be
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
changed if the estimated annual energy
consumption or energy efficiency
ratings of the products within the range
change in a way that would alter the
upper or lower estimated annual energy
consumption or energy efficiency rating
limits of the range by 15% or more from
that previously published. When a range
is revised, all information disseminated
after 90 days following the publication
of the revision shall conform to the
revised range. Products that have been
labeled prior to the effective date of a
modification under this section need
not be relabeled.
*
*
*
*
*
8. Amend § 305.11 by revising
paragraph (a)(1) and adding paragraph
(g) to read as follows:
I
PO 00000
Frm 00032
Fmt 4700
Sfmt 4700
§ 305.11
Aug. 1.
Aug. 1.
Aug. 1.
July 1.
July 1.
June 1.
May 1.
May 1.
May 1.
May 1.
Oct. 1.
Mar. 1.
Mar. 1.
Mar. 1.
Mar. 1.
Mar. 1.
Mar. 1.
Mar. 1 [Stayed].
Mar. 1 [Stayed].
Mar. 1 [Stayed].
Labeling for covered products.
(a) Labels for covered products other
than fluorescent lamp ballasts, general
service fluorescent lamps, medium base
compact fluorescent lamps, general
service incandescent lamps (including
incandescent reflector lamps),
showerheads, faucets, water closets,
urinals, and ceiling fans—(1) Layout.
All energy labels for each category of
covered product shall use one size,
similar colors and typefaces with
consistent positioning of headline, copy
and charts to maintain uniformity for
immediate consumer recognition and
readability. Trim size dimensions for all
labels shall be as follows: width must be
between 5 1⁄4 inches and 5 1⁄2 inches
(13.34 cm. and 13.97 cm.); length must
be 7 3⁄8 inches (18.73 cm.). Copy is to
E:\FR\FM\28DER1.SGM
28DER1
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
(iv) The product’s airflow efficiency
rating at high speed expressed in cubic
feet per minute per watt and determined
pursuant to § 305.5 of this part;
(v) The following statement shall
appear on the label for fans fewer than
49 inches in diameter: ‘‘Compare: 36’’ to
48’’ ceiling fans have airflow
efficiencies ranging from approximately
71 to 86 cubic feet per minute per watt
at high speed.’’;
(vi) The following statement shall
appear on the label for fans 49 inches or
more in diameter: ‘‘Compare: 49’’ to 60’’
ceiling fans have airflow efficiencies
ranging from approximately 51 to 176
cubic feet per minute per watt at high
speed.’’; and
(vii) The following statements shall
appear at the bottom of the label as
indicated in Ceiling Fan Label
Illustration of Appendix L of this part:
‘‘Money-Saving Tip: Turn off fan when
leaving room.’’
(2) Label Size and Text Font. The
label shall be four inches wide and three
inches high. The text font shall be Arial
or another equivalent font. The text on
the label shall be black with a white
background. The label’s text size and
content, and the order of the required
PO 00000
Frm 00033
Fmt 4700
Sfmt 4725
disclosures shall be consistent with
Ceiling Fan Label Illustration of
Appendix L of this part.
(3) Placement. The ceiling fan label
shall be printed on the principal display
panel of the product’s packaging.
(4) Additional Information: No marks
or information other than that specified
in this part shall appear on this label,
except a model name, number, or
similar identifying information.
I 9. Add § 305.14(e) to read as follows:
§ 305.14
Catalogs.
*
*
*
*
*
*
(e) Any manufacturer, distributor,
retailer, or private labeler who
advertises a covered product that is a
ceiling fan in a catalog, from which it
may be purchased, shall disclose clearly
and conspicuously in such catalog, on
each page that lists the covered product,
all the information concerning the
product required by § 305.11(g)(1).
I 10. Amend part 305, Appendix L by
adding Ceiling Fan Label Illustration at
the end of the appendix to read as
follows:
Appendix L to Part 305—Sample Labels
*
E:\FR\FM\28DER1.SGM
*
*
28DER1
*
*
ER28DE06.000</GPH>
cprice-sewell on PROD1PC66 with RULES
be set between 27 picas and 29 picas
and copy page should be centered (right
to left and top to bottom). Depth is
variable but should follow closely the
prototype labels appearing at the end of
this part illustrating the basic layout. All
positioning, spacing, type sizes and line
widths should be similar to and
consistent with the prototype labels.
*
*
*
*
*
(g) Ceiling Fans—(1) Content. Any
covered product that is a ceiling fan
shall be labeled clearly and
conspicuously on the principal display
panel with the following information in
order from top to bottom on the label:
(i) The words ‘‘ENERGY
INFORMATION’’ shall appear at the top
of the label with the words ‘‘at High
Speed’’ directly underneath;
(ii) The product’s airflow at high
speed expressed in cubic feet per
minute and determined pursuant to
§ 305.5 of this part;
(iii) The product’s electricity usage at
high speed expressed in watts and
determined pursuant to § 305.5 of this
part, including the phrase ‘‘excludes
lights’’ as indicated in Ceiling Fan Label
Illustration of Appendix L of this part;
78065
78066
*
*
Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations
*
*
*
By direction of the Commission.
C. Landis Plummer,
Acting Secretary.
[FR Doc. 06–9901 Filed 12–27–06; 8:45 am]
BILLING CODE 6750–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9307]
RIN 1545–BC18
Changes in Computing Depreciation
Internal Revenue Service (IRS),
Treasury.
ACTION: Final and temporary
regulations.
AGENCY:
SUMMARY: This document contains
regulations relating to a change in
computing depreciation or amortization
as well as a change from a
nondepreciable or nonamortizable asset
to a depreciable or amortizable asset (or
vice versa). Specifically, these
regulations provide guidance to any
taxpayer that makes a change in
depreciation or amortization on whether
such a change is a change in method of
accounting under section 446(e) of the
Internal Revenue Code and on the
application of section 1016(a)(2) in
determining whether the change is a
change in method of accounting.
DATES: Effective Date. These regulations
are effective December 28, 2006.
Applicability Dates. For dates of
applicability, see §§ 1.167(e)–1(e),
1.446–1(e)(4), and 1.1016–3(j).
FOR FURTHER INFORMATION CONTACT:
Douglas H. Kim, (202) 622–3110 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
cprice-sewell on PROD1PC66 with RULES
Background
This document contains amendments
to 26 CFR part 1. On January 2, 2004,
the IRS and Treasury Department
published temporary regulations (TD
9105) in the Federal Register (69 FR 5)
relating to the application of section
446(e) of the Internal Revenue Code
(Code) and § 1.167(e)–1 to a change in
depreciation or amortization and the
application of section 1016(a)(2) in
determining whether a change in
depreciation or amortization is a change
in method of accounting. On the same
date, the IRS published a notice of
proposed rulemaking (REG–126459–03)
cross-referencing the temporary
regulations in the Federal Register (69
VerDate Aug<31>2005
15:10 Dec 27, 2006
Jkt 211001
FR 42). No public hearing was requested
or held. Several comments responding
to the notice of proposed rulemaking
were received. After consideration of all
the comments, the proposed regulations
are adopted as amended by this
Treasury decision, and the
corresponding temporary regulations are
removed. The revisions are discussed
here in this preamble.
Section 1400N(d), which was added
to the Code by section 101(a) of the Gulf
Opportunity Zone Act of 2005, Public
Law 109–135 (119 Stat. 2577), generally
allows a 50-percent additional first year
depreciation deduction for qualified
Gulf Opportunity Zone property. The
final regulations reflect the enactment of
section 1400N(d).
Explanation of Provisions
Scope
The final regulations provide the
changes in depreciation or amortization
(depreciation) for property for which
depreciation is determined under
section 167, 168, 197, 1400I, 1400L(b),
1400L(c), or 1400N(d), or former section
168, of the Code that are, and those
changes that are not, changes in method
of accounting under section 446(e). The
final regulations also clarify that the
rules in § 1.167(e)–1 with respect to a
change in the depreciation method
made without the consent of the
Commissioner apply only to property
for which depreciation is determined
under section 167 (other than under
section 168, 1400I, 1400L, or 1400N(d),
or former section 168). Additionally, the
final regulations provide that section
1016(a)(2) does not permanently affect a
taxpayer’s lifetime income for purposes
of determining whether a change in
depreciation is a change in method of
accounting under section 446(e) and
§ 1.446–1(e).
I. Changes in Depreciation Method
Under Section 167
The final regulations retain the rules
contained in the temporary regulations
providing that the rules in § 1.167(e)–1
with respect to a change in depreciation
method under § 1.167(e)–1(b), (c), and
(d) made without the consent of the
Commissioner apply only to property
for which depreciation is determined
under section 167 (other than under
section 168, 1400I, 1400L, or 1400N(d),
or former section 168). No comments
were received suggesting changes to
these rules.
PO 00000
Frm 00034
Fmt 4700
Sfmt 4700
II. Changes in Depreciation That Are,
and Are Not, a Change in Method of
Accounting Under Section 446(e)
The final regulations provide rules on
the changes in depreciation that are, and
are not, a change in method of
accounting under section 446(e).
A. Changes in Depreciation That Are
Changes in Method of Accounting
The final regulations retain the rules
contained in the temporary regulations
providing the changes in depreciation
that are a change in method of
accounting under section 446(e). These
changes are a change in the treatment of
an asset from nondepreciable or
nonamortizable to depreciable or
amortizable, or vice versa. Additionally,
a correction to require depreciation in
lieu of a deduction for the cost of
depreciable or amortizable assets that
had been consistently treated as an
expense in the year of purchase, or vice
versa, is a change in method of
accounting. Further, changes in
computing depreciation generally are a
change in method of accounting,
including a change in the depreciation
method, period of recovery, or
convention of a depreciable or
amortizable asset, and a change to or
from claiming the additional first year
depreciation deduction provided by
section 168(k), 1400L(b), or 1400N(d)
under certain circumstances.
No comments were received
suggesting changes to these rules.
However, a commentator inquired
whether a calendar-year taxpayer that
has not claimed the 30-percent
additional first year depreciation for
qualified property acquired after
September 10, 2001, and placed in
service prior to January 1, 2002, may
claim the 30-percent additional first
year depreciation by requesting a
change in method of accounting. To
claim the 30-percent additional first
year depreciation for this property, Rev.
Proc. 2003–50 (2003–2 C.B. 119)
provides that the taxpayer had to file an
amended return on or before December
31, 2003, or file a Form 3115,
‘‘Application for Change in Accounting
Method,’’ with the taxpayer’s timely
filed 2003 Federal tax return. If the
taxpayer did not file this amended
return or Form 3115, the taxpayer has
made the deemed election not to deduct
the additional first year depreciation for
the 2001 taxable year. Accordingly, the
taxpayer’s change to claiming the 30percent additional first year
depreciation for qualified property
placed in service in the taxable year that
included September 11, 2001, is not a
change in method of accounting under
E:\FR\FM\28DER1.SGM
28DER1
]]>Agencies
[Federal Register Volume 71, Number 249 (Thursday, December 28, 2006)]
[Rules and Regulations]
[Pages 78057-78066]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-9901]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
16 CFR Part 305
RIN 3084-AA74
Appliance Labeling Rule
AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Energy Policy Act of 2005 directs the Commission to issue
labeling requirements for the electricity used by ceiling fans to
circulate air. The Commission is publishing amendments to the Appliance
Labeling Rule that establish energy labeling requirements for these
products.
DATES: The amendments published in this final rule will become
effective on January 1, 2009.
ADDRESSES: Requests for copies of this document are available from:
Public Reference Branch, Room 130, Federal Trade Commission, 600
Pennsylvania Avenue, NW., Washington, DC 20580. The complete record of
this proceeding is also available at that address. Relevant portions of
the proceeding, including this document, are available at https://
www.ftc.gov.
FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889,
Attorney, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION:
I. Background
Section 324 of the Energy Policy and Conservation Act of 1975
(``EPCA'') (42 U.S.C. 6291-6309), as amended, requires the FTC to
prescribe labeling rules for the disclosure of estimated annual energy
cost, or alternative energy consumption information, for a variety of
products covered by the statute, including home appliance, lighting,
and plumbing products.\1\ The Commission's Appliance Labeling Rule
(``the Rule'') (16 CFR part 305) implements the requirements of EPCA by
directing manufacturers to disclose energy information about major
household appliances. This information enables consumers to compare the
energy use or efficiency of competing models.\2\ When initially
published in 1979,\3\ the Rule applied to eight appliance categories:
refrigerators, refrigerator-freezers, freezers, dishwashers, water
heaters, clothes washers, room air conditioners, and furnaces. The
Commission subsequently expanded the Rule's coverage to include central
air conditioners, heat pumps, fluorescent lamp ballasts, plumbing
products, lighting products, pool heaters, and some other types of
water heaters.\4\
---------------------------------------------------------------------------
\1\ 42 U.S.C. 6294.
\2\ More information about the Rule can be found at https://
www.ftc.gov/appliances.
\3\ 44 FR 66466 (Nov. 19, 1979).
\4\ See 52 FR 46888 (Dec. 10, 1987) (central air conditioners);
59 FR 49556 (Sept. 28, 1994) (pool heaters); 54 FR 28031 (July 5,
1989) (fluorescent lamp ballasts); 58 FR 54955 (Oct. 25, 1993)
(certain plumbing products); and 59 FR 25176 (May 13, 1994)
(lighting products).
---------------------------------------------------------------------------
Congress enacted the Energy Policy Act of 2005 (``EPACT 2005'')
directing the Commission to require energy labeling for ceiling
fans.\5\ Pursuant to this directive, on June 21, 2006, the Commission
published a notice of proposed rulemaking (``NPRM'') seeking public
comment on proposed fan labeling requirements (71 FR 35584). Before
discussing the comments received in response to the NPRM and the
Commission's final requirements for ceiling fan labeling, this Notice
describes the provisions of EPACT 2005, ceiling fan uses, ENERGY STAR
specifications, and existing state labeling programs.
---------------------------------------------------------------------------
\5\ Section 137 of EPACT 2005 (Pub. L. 109-58 (2005)).
---------------------------------------------------------------------------
A. Energy Policy Act of 2005
Section 137 of EPACT 2005 (Pub. L. No. 109-58 (2005)) amends EPCA
to include new requirements related to ceiling fans. Section
324(a)(2)(G)(i) of EPCA (42 U.S.C. 6294(a)(2)(G)(i)) requires the
Commission to ``issue, by rule, in accordance with this section,
labeling requirements for the electricity used by ceiling fans to
circulate air in a room.'' The statute also directs the Department of
Energy (``DOE'') to prescribe test procedures and energy conservation
standards for ceiling fans.\6\ (See 42 U.S.C. 6293(b)(16) and 42 U.S.C.
6295(v)). According to EPACT 2005, the test procedure for ceiling fans
must be based on the ``ENERGY STAR Testing Facility Guidance Manual:
Building a Testing Facility and Performing the Solid State Test Method
for ENERGY STAR Qualified Ceiling Fans, Version 1.1'' (``ENERGY STAR
Guidance Manual'') published by the Environmental Protection Agency
(EPA). (42 U.S.C. 6293(b)(16)). However, in issuing testing and
conservation standards, DOE may exempt or set different standards for
certain product classes if the primary standards are not technically
feasible or economically justified. DOE may also establish separate or
exempted product classes for highly decorative fans for which air
movement performance is a secondary design feature. (42 U.S.C.
6295(v)). DOE published a final test procedure for ceiling fans on
December 8, 2006 (71 FR 71430) based on the ENERGY STAR Guidance
Manual.
---------------------------------------------------------------------------
\6\ EPACT 2005 (42 U.S.C. 6295(ff)) further directs DOE to
require that all ceiling fans manufactured after January 1, 2007
have fan speed controls separate from any lighting controls,
adjustable speed controls (either more than one speed or variable
speed), and reversible fan action capability (except for some
exempted categories).
---------------------------------------------------------------------------
In developing labeling rules for products covered by EPCA (such as
ceiling fans), the Commission must follow the requirements set out in
section 324(c) (42 U.S.C. 6294(c)).\7\ Under section 324(c), labels
must disclose the estimated annual operating cost determined in
accordance with DOE test procedures unless otherwise indicated in the
law. The Commission, however, may require a different measure of energy
consumption if DOE determines that the cost disclosure is not
technologically feasible or the Commission determines such a disclosure
is not likely to assist consumers in making purchasing decisions or is
not economically feasible. (42 U.S.C. 6294(c)(1)(A)). In addition,
labels must disclose information about the range of operating costs (or
a different measure of energy consumption if required by the
Commission). (42 U.S.C. 6294(c)(1)(B)). The Commission's labeling rules
also must include a description of the applicable type or class of
covered product, information about the range of operating costs (or
energy use), a description of applicable test procedures, a prototype
label, and directions for displaying the label. (42 U.S.C. 6294(c)(2)).
---------------------------------------------------------------------------
\7\ EPACT 2005 did not amend the list of covered products in
EPCA section 322 (42 U.S.C. 6292) to include the new products added
by the legislation such as ceiling fans, exit signs, and torchieres.
Nevertheless, language elsewhere in EPACT 2005 (e.g., section
137(b)) makes it clear that Congress intended to treat these items
as covered products. Accordingly, the Commission believes that
ceiling fans are subject to EPCA requirements for covered products,
such as energy range disclosures on labels required by section
324(c) and the reporting requirements of section 326(b).
---------------------------------------------------------------------------
Additionally, EPCA authorizes the Commission to require the
disclosure of energy information found on the label in any printed
material displayed or distributed at the point of sale. (42 U.S.C.
6293(c)(4)). The Commission also may direct manufacturers to provide
additional energy-related disclosures on the label (or information
shipped with the product), including instructions for the maintenance,
use, or repair of the
[[Page 78058]]
covered product. (42 U.S.C. 6293(c)(5)). Finally, section 326(b) of
EPCA contains certain reporting requirements for covered products. (42
U.S.C. 6296).
B. Ceiling Fan Uses
According to DOE, 69.6 million U.S. households (or 65.1%) had
ceiling fans in 2001.\8\ Ceiling fans can improve the comfort of a home
by circulating air to create a draft throughout a room. For homes using
air conditioning, a ceiling fan allows consumers to raise the
thermostat setting about 4[deg]F with no reduction in comfort. In
temperate climates, or during moderately hot weather, ceiling fans may
allow consumers to avoid using air conditioning altogether. A larger
fan blade provides comparable cooling at a lower velocity than a
smaller blade. DOE recommends a 36- or 44-inch diameter fan to cool a
room of up to 225 square feet, while fans that are 52 inches or more
should be used in larger rooms.\9\ In the winter, by reversing the
blade direction and operating at low speed, ceiling fans can provide a
gentle updraft, which forces warm air near the ceiling down into the
occupied space.\10\
---------------------------------------------------------------------------
\8\ See Energy Information Administration, Office of Energy
Markets and End Use, 2001 Residential Energy Consumption Survey,
https://www.eia.doe.gov/emeu/recs/ceilingfans/ceiling_fan.html.
\9\ See https://www.eere.energy.gov/consumer/your_home/space_
heating_cooling/index.cfm/mytopic=12355.
\10\ See https://www.energystar.gov/index.cfm?c=ceiling_
fans.pr--ceiling--fans--usage.
---------------------------------------------------------------------------
C. ENERGY STAR Specifications
As mentioned above, the statute requires manufacturers to derive
the energy information on ceiling fan labels from DOE tests, which must
be based on the ENERGY STAR Guidance Manual. The ENERGY STAR program,
administered by EPA and DOE, is a voluntary government labeling program
that identifies high efficiency products. Ceiling fans that move air at
least 20% more efficiently, on average, than standard models qualify
for the ENERGY STAR label. The program also has minimum airflow and
airflow efficiency requirements for qualifying models.\11\
---------------------------------------------------------------------------
\11\ Airflow is the rate of air movement at a specific fan
setting expressed in cubic feet per minute (``CFM''). Airflow
efficiency is the ratio of airflow divided by power consumed by the
motor and controls at a specific ceiling fan setting expressed in
CFM per watt (``CFM/Watt'').
---------------------------------------------------------------------------
ENERGY STAR requires participating manufacturers to conduct tests
and self-certify those product models that meet the ENERGY STAR
guidelines. Manufacturers must derive airflow and airflow efficiency
measurements using the Solid State Test Method as defined in the ENERGY
STAR Guidance Manual.\12\ Under this method, testing personnel place
the fan above a large diameter tube in a standard temperature and
humidity-controlled room. The air delivered by the fan passes through
the tunnel where velocity sensors mounted on a rotating arm measure the
airflow at various points. ENERGY STAR directs manufacturers to measure
efficiency at each of three fan speeds (low, medium, and high). For
example, to meet ENERGY STAR standards, at low speed, fans must have a
minimum airflow of 1,250 CFM and an efficiency of 155 CFM/Watt and, at
high speed, fans must have a minimum airflow of 5,000 CFM and an
efficiency of 75 CFM/Watt. ENERGY STAR also requires manufacturers to
label the packages of qualifying products with airflow, fan power,
consumption, and airflow efficiency at three operating speeds.
---------------------------------------------------------------------------
\12\ ENERGY STAR Testing Facility Guidance Manual, Version 1.1
(Dec. 9, 2002).
---------------------------------------------------------------------------
D. California Energy Commission
In addition to the ENERGY STAR specifications and test method, the
State of California has requirements for ceiling fans. Under the
California regulations, each ceiling fan package must display, in
characters no less than 1/4 inch high, the unit's airflow (in CFM) and
airflow efficiency (in CFM/Watt) at low, medium, and high speeds. The
requirements only apply to fans with diameters of 50 inches or greater.
(Cal. Code Regs. tit. 20, Sec. 1607(d)(7)). California regulations do
not specify the necessary test procedures.
II. Summary of Final Rule Requirements
Consistent with the Commission's June 21, 2006 NPRM, the Final Rule
requires ceiling fan manufacturers to label their product packages
with: (1) The fan's airflow at high speed in CFM; (2) the fan's power
consumption in watts at high speed; (3) the fan's airflow efficiency in
CFM/Watt at high speed; and (4) a range of airflow efficiencies at high
speed for standard-sized fans on the market as published by the
Commission. To obtain this information, manufacturers will have to test
their fans pursuant the procedures required by DOE Appendix U to
Subpart B of 10 CFR part 430. The Final Rule requires manufacturers to
provide this information on a label affixed to the product packaging as
well as in paper and online catalogs. The Rule also requires
manufacturers to submit reports to the Commission with high speed
airflow, power consumption, and airflow efficiency information for the
applicable models pursuant to EPCA's reporting requirements. (42 U.S.C.
6296). By statute, the Rule does not apply to fans produced before
January 1, 2009.
III. Final Rule Issues and Comments Received on Proposed Rule
The Commission received four comments in response to its June 21,
2006 NPRM.\13\ Generally, the comments supported the FTC's proposed
requirements. The Commission has made a few minor changes to the
proposed rule based on comments and additional information. In general,
however, the Final Rule is substantially similar to that proposed in
the NPRM. The following sections describe the changes made to the
proposed rule, concerns raised by the comments, and other issues
related to the final requirements.
---------------------------------------------------------------------------
\13\ American Lighting Association (``ALA'') (09/08/2006)
523596-00003; People's Republic of China (``PRC'') (09/08/
2006) 523596-00001; Hunter Fan Company (``Hunter Fan'')
(09/11/2006) 523596-00002; and The Home Depot (10/23/06)
(late-filed) 523596-00005.
---------------------------------------------------------------------------
A. Changes to Proposed Rule
The Commission has made six minor changes to the proposed language.
First, we added a sentence to the reporting requirements in Sec.
305.8(a)(1) to clarify that efficiency ratings, electricity
consumption, and capacity for ceiling fans must be provided at high
speed and that manufacturers must report fan size (measured by diameter
in inches). Second, we have added a sentence to the description of the
term ``ceiling fan'' in section 305.5 to clarify that the Rule does not
apply to products for which DOE has no test procedure. Third, we
included efficiency range information in Sec. 305.11(g)(1)(E)&(F).
Fourth, in response to comments, we clarified Sec. 305.11(g)(2) to
indicate that the label's text shall be black with a white background
and clarified that the term ``placement'' refers to placement of text
within the label. Fifth, Sec. 305.11(g) in the Final Rule indicates
that the label's text size and content, and the order of the required
disclosures shall be consistent with Ceiling Fan Label Illustration of
Appendix L of Part 305. Sixth, we have changed the language in the
catalog requirement in Sec. 305.14 to clarify that the required
information must be disclosed clearly and conspicuously.
B. Test Procedures
Under EPCA (42 U.S.C. 6294(c)), manufacturers must determine the
energy performance of their products pursuant to standard DOE test
[[Page 78059]]
procedures.\14\ As mentioned earlier in this Notice, DOE published
final test procedures for ceiling fans on December 8, 2006. (71 FR
71340). EPACT 2005 directs the Commission to issue a labeling rule
within 18 months after the Act's passage and also indicates that such
labeling rules cannot be applied to products manufactured before
January 1, 2009. (42 U.S.C. 6294(a)(2)(G)). Accordingly, in compliance
with EPACT 2005, the Commission is issuing the Rule now with an
effective date of January 1, 2009.
---------------------------------------------------------------------------
\14\ In its comments, the PRC suggested that the required test
method should be international standard IEC 60879-1986 and raised
additional questions about the test procedure. EPCA charges DOE with
the responsibility for setting test procedures. In the case of
ceiling fans, Congress has mandated that DOE base its test on the
existing ENERGY STAR procedure.
---------------------------------------------------------------------------
C. Operating Costs
Section 324(c) of EPCA (42 U.S.C. 6294(c)) requires that labels for
covered products contain operating-cost information unless the
Commission determines that such a disclosure is not likely to assist
consumers in making purchasing decisions or is not economically
feasible. As discussed in the NPRM, the Commission believes that annual
operating costs are not likely to assist consumers because ceiling fan
use is likely to vary significantly depending on factors such as
climate, household heating and cooling systems, and individual use. We
also note that the DOE test procedure does not contain sufficient
information to allow manufacturers to calculate annual operating costs.
No comments raised objections to the Commission's proposal in this
regard. Accordingly, the Final Rule does not require operating costs on
ceiling fans.
D. Content of Label
In the NPRM, the Commission proposed using three descriptors, each
of which provides different information about the fan. Electricity use
(in watts) provides information about the power drawn by the fan and
allows consumers to compare the fan's energy use to other household
items such as light bulbs. Electricity use information also provides an
idea of how much the fan will cost to operate because the higher the
wattage, the higher the operating costs. Electricity use does not,
however, provide information about the amount of air the fan can move.
For example, a fan that uses very little electricity may not create air
movement adequate for a consumer's needs.
The Commission' NPRM, therefore, also proposed requiring that each
label contain airflow and airflow efficiency information. The airflow
rating describes the fan's capacity, that is, the amount of air the fan
will move in CFM--the greater the CFM, the more air the model will
move. The airflow efficiency, expressed in CFM/Watt indicates the
amount of air the product will move for each watt of electricity used.
This efficiency information describes the relationship between the
product's energy use and its output, not necessarily the electricity
used by the product. In its comments, Hunter Fan agreed that the three
proposed descriptors are required to provide ``consumers with the
necessary information to make an informed purchase.'' It noted that CFM
information is necessary because it provides consumers with information
about whether a particular model will move sufficient air for large
rooms. No comments opposed these disclosures.
Based on the comments and the reasoning detailed above, the
Commission continues to believe that all three disclosures should be
included on the label. As discussed in the NPRM, the use of a single
descriptor does not appear to be adequate because each single
descriptor fails, by itself, to convey sufficient information to
explain fully the product's energy performance. As discussed above,
electricity use does not provide information about fan output.
Similarly, the efficiency rating is not necessarily an accurate
predictor of the fan's electricity consumption or its operating cost.
Where there is significant variation in the airflow of competing
models, the label should not suggest that high efficiency necessarily
equates with cost savings.\15\ Accordingly, the Commission is requiring
the inclusion of all three pieces of information on the label.
---------------------------------------------------------------------------
\15\ Because airflow efficiency is the ratio of airflow (i.e.,
fan strength) to power consumption, a less efficient model may
deliver less air but, at the same time, use less electricity and
thus cost less to operate. For example, a model with an efficiency
rating of 100 CFM/Watt, 6,000 CFM airflow, and 60 watts power
consumption will use more electricity and thus cost more to operate
than a fan with a lower efficiency rating of 91 CFM/Watt, 5,000 CFM
airflow, and power consumption of 55 watts.
---------------------------------------------------------------------------
The Final Rule also limits the disclosures to high-speed settings
in order to simplify the information on the label.\16\ The Commission
expects that the information at high speed will be adequate to allow
consumers to compare the efficiency rating and power consumed by
competing models. The inclusion of information for other speed settings
would clutter the label with few additional benefits. In its comments,
Hunter Fan Company indicated that ``showing total wattage used on high
speed is a good general comparison tool for consumers to understand the
electricity used relative to other devices in the home.'' It also
observed ``that as long as the ceiling fan has a high CFM/Watt rating,
then the fan will be more efficient on whichever speed is used.'' The
ALA explained that high speed is ``the true unregulated performance of
the fan'' and that capacitors, inserted by manufacturers to control
medium and low speeds, are set at values determined by each individual
manufacturer. In addition, as proposed in the NPRM, the label must
contain a money-saving tip reminding consumers to turn off their fans
when they leave a room.\17\ No comments opposed the content of the
proposed label disclosures.
---------------------------------------------------------------------------
\16\ We have added a sentence to the reporting requirements in
Sec. 305.8(a)(1) to clarify that efficiency ratings, electricity
consumption, and capacity for ceiling fans must be provided at high
speed.
\17\ This is intended to help consumers understand that fans
provide no cooling benefit in an unoccupied room.
---------------------------------------------------------------------------
E. Additional Performance Information (Including ENERGY STAR
Information)
Under the Final Rule, manufacturers have the discretion to provide
additional energy information elsewhere on the package or in marketing
information. This information could include airflow efficiencies, power
consumption in watts, and airflow at other speeds as long as such
information is adequately substantiated and fairly represents the
results of the applicable test procedure. To ensure that all fan
packages feature a uniform energy label, however, the Rule limits the
information allowed on the required label. A uniform label on every
ceiling fan package should make it easier for consumers to locate and
compare information for different models as they shop.
Both Hunter Fan and ALA supported the proposal to require a
consistent, uniform label. ALA, however, noted that ENERGY STAR-
qualified fans are currently marked with an energy performance label
required by the ENERGY STAR program. ALA urged that manufacturers be
able to use the ENERGY STAR label on qualified products, in lieu of the
FTC label. An exception for such a large portion of the market,
however, would dilute the benefits of a uniform label. It may also
imply to some consumers that fans bearing the FTC label are lower in
efficiency, which may not be the case given the voluntary nature of the
ENERGY STAR program. In addition, the absence of the FTC-required label
on
[[Page 78060]]
ENERGY STAR fans could create general confusion because some models
would have the FTC label and others would not. Accordingly, the Final
Rule does not exempt ENERGY STAR models. Manufacturers who choose to
participate in ENERGY STAR can continue to provide the ENERGY STAR
performance data elsewhere on the product package in accord with the
ENERGY STAR guidelines.
F. Efficiency Ranges
In its NPRM, the Commission sought comment on the range of
efficiency numbers that should be used in the statement proposed on the
label (e.g., ``Compare: 49'' to 60'' ceiling fans have airflow
efficiencies ranging from approximately --to-- cubic feet per minute
per watt at high speed.''). The Commission proposed to include two
separate ranges in the Rule, one for fans with blade sizes between 36''
to 48'' and another for 49'' to 60.'' Unfortunately, the comments did
not provide data that could be used to develop such ranges. The
Commission staff, therefore, has reviewed data from several sources,
including online information from the California Energy Commission
(https://www.energy.ca.gov/appliances/appliance/), EPA's
ENERGYSTAR program (https://www.energystar.gov/
index.cfm?c=ceiling_fans.pr--ceiling--fans), and various
manufacturer and retail websites. Based on this data, the Commission is
publishing the following ranges for placement on the label: 71 to 86
CFM/Watt at high speed for fans with blade sizes between 36'' to 48''
and 51 to 176 CFM/Watt at high speed for fans with blade sizes between
49'' to 60'' ceiling fans. (See Sec. Sec. 305.11(g)(1)(E)&(F)). The
Commission will revisit these ranges if data submissions in the future
indicate that the required ranges are substantially different than the
ranges of efficiency used by fans in the marketplace.
In its comments, the PRC suggested that the energy efficiency range
should be dynamic and published periodically. As stated in the NPRM,
the Commission did not propose a detailed system of range information
because it is unclear whether such information would provide consumer
benefits commensurate with the costs associated with the necessary
label changes. The Commission has not reviewed evidence that would
change this view. As discussed above, however, the Commission will
consider changes in the future if the actual efficiency ranges of
products in the market place diverge substantially from the published
ranges.
G. Location of Label
Under the Final Rule, manufacturers must place the ceiling fan
label on product packages rather than on the products themselves. This
requirement should assist consumers shopping in retail stores. Both
Hunter Fan and ALA agreed. Hunter Fan explained that consumers would
have a difficult time reading labels affixed to the products themselves
because floor models are typically positioned in the store eight to
nine feet off the floor. The PRC suggested that the money-saving tip on
the label be placed on the ceiling fan's switch box. This suggestion
raises cost, feasibility, and consistency questions that have not been
explored in this proceeding. Accordingly, we are not requiring such
marking in the Final Rule. We note, however, that nothing prohibits
manufacturers from marking their products with this information
voluntarily.
H. Size and Format Requirements
The NPRM proposed certain size and format requirements for the
label. As with the proposed rule, the Final Rule requires that the
label must be at least four inches wide and three inches high. Under
the Final Rule, the text font shall be Arial or another equivalent
font, and the label's text size and content, and the order of the
required disclosures shall be consistent with Ceiling Fan Label
Illustration of Appendix L of Part 305.\18\ The proposed rule did not
specify the background color for the label. ALA suggested that, ``for
labels integrated into the carton's printing plate, the nomenclature
shall be black on a contrasting background.'' While we understand
manufacturers' desire to incorporate background package colors on the
label, we believe that this may detract from providing a consistent,
recognizable label across all competing models to facilitate comparison
shopping. Therefore, we have clarified the Final Rule language to
indicate that label must be in black text with a white background.
---------------------------------------------------------------------------
\18\ The proposed rule indicated that the sample illustration in
the Appendix provided ``suggested'' font sizes. The language in the
Final Rule provides more definitive instructions for preparing the
label and should help ensure that the label is consistent in
appearance from product to product.
---------------------------------------------------------------------------
I. Request for Exemptions
ALA suggested that the Commission grant an exemption for high speed
axial ceiling fans with contoured blades and ceiling fans with multiple
fan assemblies because the current ENERGY STAR test procedure (which
serves as the basis for DOE's procedure) is not a suitable test for
these types of products. Similarly, the PRC urged the Commission to
exempt highly decorative fans for which air movement is the secondary
design feature.
EPACT 2005 provides a definition of ``ceiling fan'' and directs the
Commission to issue a labeling rule for products fitting that
definition. The statute defines ``ceiling fan'' as ``a nonportable
device that is suspended from a ceiling for circulating air via the
rotation of fan blades.'' (42 U.S.C. 6291(49)). We have identified no
basis for determining that the model types identified by commenters
fall outside of this definition, and the law does not provide the
Commission with explicit authority to make wholesale exemptions from
the labeling requirement for different types or models of fans that
otherwise fall within the statute's definition. Accordingly, the basis
for exempting these whole product categories from the labeling rule is
at best unclear.
At the same time, the FTC's Rule requires that manufacturers test
their products using the DOE-approved procedure. In some cases, that
procedure may not be appropriate because it may not be possible to test
certain fan types under the required test apparatus or required
conditions. In other cases, the test may yield energy information that
is not a valid source of comparison across fan types. Labeling in these
circumstances could yield confusing or misleading results for consumers
or could simply be impossible. Therefore, if DOE determines that its
test procedure does not apply to certain types or models of ceiling
fans, then the Commission will not expect manufacturers to label those
products.\19\ The final definition of ``ceiling fan'' indicates that
the requirements of the rule are limited to those ceiling fans for
which the Department of Energy has adopted and published test
procedures for measuring energy usage. The Commission itself, however,
is not issuing labeling exemptions for any ceiling fan types or models
at this time.
---------------------------------------------------------------------------
\19\ We note that the statute authorizes DOE to issue exemptions
for certain product classes if the primary standards are not
technically feasible or economically justified and to establish
separate or exempted product classes for highly decorative fans for
which air movement performance is a secondary design feature. (42
U.S.C. 6295(v)).
---------------------------------------------------------------------------
J. Catalog Disclosures
Section 305.14 of the Rule currently requires that any
manufacturer, distributor, retailer, or private labeler who advertises
a covered product in a catalog, including a website, must provide the
information required by
[[Page 78061]]
section 305.11(g)(1) (i.e., airflow, electricity usage, airflow
efficiency, and range information) on the website and in the catalogs.
Because ceiling fans are covered products, the Final Rule amends these
catalog requirements to include ceiling fans. Pursuant to the Final
Rule, the required information should appear on each page that lists
the covered product (see Sec. 305.14(e)).\20\
---------------------------------------------------------------------------
\20\ We have also changed the language in the catalog
requirement in Sec. 305.14 to clarify that the required information
must be disclosed clearly and conspicuously.
---------------------------------------------------------------------------
K. Reporting Requirements
Consistent with EPCA (42 U.S.C. 6296), the NPRM contained certain
reporting requirements for ceiling fans consistent with those
applicable to other products covered by the Rule. For example, the
statute requires manufacturers to submit annual reports to the FTC
listing energy data for each model under current production (42 U.S.C.
6296(b)(4)).
Consistent with the proposed rule, the Final Rule will require
manufacturers to submit: Information on the energy efficiency of
ceiling fans, the model numbers for each basic model, the total energy
consumed, the number of tests performed, and the capacity (i.e., cubic
feet per minute). The Rule also requires the submission of an annual
report for all models under production on March 1st of each year
(beginning in 2009). In addition, pursuant to section 305.8(c) of the
Rule, manufacturers must submit data for new models prior to their
distribution. The Final Rule contains an additional sentence in
305.8(a)(1) clarifying that manufacturers must report the diameter of
models in inches and efficiency ratings, electricity consumption, and
capacity at high speed. The diameter information (i.e., fan-blade size)
will allow the FTC to group the fan data into the range of
comparability categories established by the Rule (e.g., 49 to 60 inch
fans).
The PRC asked several questions related to the process for the
submission of data to the FTC. The FTC staff provides guidance
regarding the submission of data at https://www.ftc.gov/bcp/conline/
edcams/eande/faq.htm. The FTC accepts data submissions in a variety of
formats, including paper and email. Most manufacturers submit data via
email using the spreadsheet files provided by the staff at the website.
In addition, under the FTC's Rule, it is not necessary to obtain third-
party accreditation.
L. Miscellaneous Issues
ALA urged that the Commission exempt ceiling fans intended for
export. We note that EPCA's consumer labeling requirements (and thus
the Rule's requirements) do not apply to covered products manufactured
for export and identified as such (see 42 U.S.C. 6300). ALA also
mentioned that some models may have different motors because many
manufacturers have multiple sources of supply for a given model. ALA
asked whether the multiple sources of information should be disclosed
to the consumer. Under the Rule, manufacturers must test and label each
model following DOE standard test procedures. As a general matter, the
energy performance of models sold on the market should be consistent
with the results of the models tested. Section 305.6 of the
Commission's Rule requires that any representation with respect to
energy consumption measures derived from the DOE test must be based
upon DOE's sampling procedures set forth in 10 CFR 430.24, subpart B.
IV. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act (``PRA''), as
amended, 44 U.S.C. 3501, et seq., the Commission submitted the proposed
Rule to the Office of Management and Budget (``OMB'') for review. OMB
approved the Rule's information collection requirements through August
31, 2009 (OMB Control No. 3084-0069). Changes made to the Rule
subsequent to publication of the NPRM have not affected the
Commission's previous burden estimate. Nonetheless, as discussed below,
the Commission has revised its previous burden estimate based on data
available from the California Energy Commission and the ENERGY STAR
program, as well as, a comment received from ALA. As required by the
PRA, the Commission has submitted its revised burden estimate to OMB
for review.
As set forth in the NPRM, the Rule contains disclosure and
reporting requirements that constitute ``information collection
requirements'' as defined by 5 CFR 1320.7(c), the regulation that
implements the Paperwork Reduction Act (``PRA'').\21\ Specifically, the
Rule expands the scope of pre-existing recordkeeping, labeling, and
reporting requirements to include manufacturers for a product not
previously covered, ceiling fans.
---------------------------------------------------------------------------
\21\ 44 U.S.C. 3501-3520.
---------------------------------------------------------------------------
The Commission's burden estimates 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), the
Commission has calculated the burden estimates based on the number of
ceiling fan units shipped domestically.
Annual Hours Burden
The Commission estimates that there are 2,500 basic models (i.e.,
units with essentially identical functional physical and electrical
characteristics) of ceiling fans sold in the U.S. \22\ Consistent with
reporting estimates for other products covered by the Rule, the
Commission estimates that the average reporting burden for
manufacturers will be approximately two minutes per basic model.
Accordingly, the estimated annual reporting burden for ceiling fans is
approximately 83 hours (2 minutes x 2,500 models / 60 minutes per
hour).
---------------------------------------------------------------------------
\22\ The Commission's previous estimate of basic models as
stated in the NPRM (1,500) has been modified to reflect ceiling fan
data available from the California Energy Commission and the ENERGY
STAR program.
---------------------------------------------------------------------------
With regard to labeling burdens, manufacturers will require
approximately four minutes to create a label for each basic model.
Thus, the approximate annual drafting burden involved in labeling is
167 hours per year [2,500 basic models x four minutes (average drafting
time per basic model) / 60 minutes per hour]. In addition, the
Commission estimates that it will take, on average, six seconds to
place labels on the packaging of each unit. Based on 2004 U.S. census
data, the Commission estimates that there are approximately 6,000,000
ceiling fan units shipped each year in the U.S. Thus, the annual burden
for affixing labels to ceiling fans is approximately 10,000 hours [six
(seconds) x 6,000,000 (the total products shipped in 2004) divided by
3,600 (seconds per hour)]. Accordingly, the total annual labeling
burden would be approximately 10,167 hours.
With regard to testing burdens, manufacturers will require
approximately three hours to test each new basic model. The FTC
estimates that, on average, 50% of the total basic models are tested
each year. Accordingly, the estimated annual testing burden would be
approximately 3,750 hours [1 hour x 3 (average number of tests run per
model) x 1,250 (50% of 2,500 basic models)].\23\
---------------------------------------------------------------------------
\23\ The Commission's previous estimate of two fan tests per
model has been increased to three tests per model based on comments
provided by ALA.
---------------------------------------------------------------------------
The Rule also requires ceiling fan manufacturers to keep records of
test data generated in performing the tests to derive information
included on labels. The Commission estimates that it will take ceiling
fan manufacturers one
[[Page 78062]]
minute per record (i.e., per model) to store the data. Accordingly, the
estimated annual recordkeeping burden would be approximately 42 hours
(1 minute x 2,500 basic models / 60 minutes per hour).
In addition, the Rule requires sellers offering ceiling fan
products through retail sales catalogs (i.e., those publications from
which a consumer can actually order merchandise) to disclose energy
information for each fan model in the catalog. Because this information
is supplied by the product manufacturers, the burden on the retailer
consists of incorporating the information into the catalog
presentation.
Based upon staff research concerning the number of manufacturers
and online retailers of ceiling fans, the Commission estimates that
there are an additional 200 catalog sellers of ceiling fans (paper
catalogs and online sellers) who are subject to the Rule's catalog
disclosure requirements. The Commission estimates that these sellers
each require approximately 17 hours per year to incorporate the data
into their catalogs. This estimate is based on the assumption that
entry of the required information takes on average one minute per
covered product and an assumption that the average online catalog
contains approximately 1,000 covered products. Given that there is
great variety among sellers in the volume of products that they offer
online, it is very difficult to estimate such numbers with precision.
In addition, this analysis assumes that information for all 1,000
products is entered into the catalog each year. This is a conservative
assumption because the number of incremental additions to the catalog
from year to year is likely to be much lower after initial start-up
efforts have been completed. Thus, the total annual disclosure burden
for all catalog sellers of ceiling fans covered by the Rule is 3,400
hours (200 sellers x 17 hours annually).
Thus, the Commission now estimates that the total annual burden due
to the inclusion of ceiling fans under the scope of the Rule will be
17,000 hours (83 hours for reporting + 167 hours for drafting labels +
10,000 hours for affixing labels + 3,750 hours for testing + 42 hours
for recordkeeping + 3,400 disclosure hours for catalog sellers),
rounded to the nearest thousand.\24\
---------------------------------------------------------------------------
\24\ This is a 2,000 hour increase from the Commission's
previous burden estimate as stated in the NPRM.
---------------------------------------------------------------------------
Annual Labor Costs
The Commission has derived labor costs by applying appropriate
estimated hourly cost figures to the burden hours described above. In
calculating the cost figures, the FTC assumes that test procedures,
recordkeeping and reporting, marking, and preparation of fact sheets
are conducted by electrical engineers at an hourly rate of $40.59.\25\
In addition, we assume labeling will be conducted by skilled clerical
personnel at an hourly rate of $14.21.
---------------------------------------------------------------------------
\25\ The ALA comment indicated that all recordkeeping,
reporting, and fact sheet preparation will be conducted by
engineering personnel at a rate of $40.59 per hour. The hourly rate
of $40.59 is based on data recently released by the U.S. Department
of Labor's Bureau of Labor Statistics. See https://www.bls.gov/ncs/
ocs/sp/ncbl0757.pdf. Accordingly, the Commission has modified its
previous assumption that such work would be conducted by skilled
technical personnel at an hourly rate of $29.40.
---------------------------------------------------------------------------
Based on the above estimates and assumptions, the total annual
labor cost for the five different categories of burden under the Rule,
applied to ceiling fans, is derived as follows: (1) annual testing
labor cost is approximately $152,213 (3,750 hours x $40.59 (electrical
engineer wage category)); and (2) annual labor costs for recordkeeping,
reporting, and catalog disclosures are approximately $149,858 (3,692
hours x $40.59 (electrical engineer wage category)); and (3) annual
labor cost for labeling will be $142,100 (10,000 hours x $14.21
(skilled clerical wage category)).\26\ Thus, the total annual labor
cost is approximately $444,000 rounded to the nearest thousand.
---------------------------------------------------------------------------
\26\ In response to the NPRM, ALA further commented that a cost
estimate for testing from one of the three certified facilities is
$1,785 per fan. The Commission assumes that labor costs make up only
a portion of this estimate. Accordingly, the additional cost for
testing proposed by ALA is addressed in the non-labor costs section
of this document.
---------------------------------------------------------------------------
Annual Non-labor Costs
In its previous submission to OMB, Commission staff examined the
five distinct burdens imposed by the proposed Rule--testing, reporting,
recordkeeping, labeling, and retail catalog disclosures--as they affect
non-labor costs incurred by manufacturers and catalog sellers of
ceiling fans. The manufacturers and retailers who make the required
disclosures in catalogs already are producing catalogs in the ordinary
course of business; accordingly, capital costs associated with such
disclosures would be de minimis. Nonetheless, ceiling fan manufacturers
that submit required reports to the Commission directly (rather than
through trade associations) incur some nominal costs for paper and
postage. Ceiling fan manufacturers must also incur the cost of
procuring labels. The Commission retains staff's previous estimate that
ceiling fan manufacturers will incur approximately $420,500 for such
costs.\27\ However, as discussed below, the Commission has decided to
revise staff's previous non-labor cost estimate to take into account
additional costs associated with testing.
---------------------------------------------------------------------------
\27\ This estimate is comprised of an estimated 6 million
ceiling fan units shipped in the U.S. each year (based on 2004 U.S.
census data) at an average cost of seven cents per label plus
approximately $500 in nominal paper and postage costs.
---------------------------------------------------------------------------
The ALA comment indicated ceiling-fan manufacturers will contract
with third-party labs to test their products. According to ALA,
manufacturers incur a testing cost of $1,785 per ceiling fan at such
labs. The Commission believes this calculation overestimates the cost
because it does not account for price adjustments based on high-volume
testing orders, and it assumes that all manufacturers will use third-
party labs.\28\ Therefore, the Commission estimates that manufacturers
will incur testing costs of $1,000 per ceiling fan. The Commission
further estimates that approximately $120 of that cost is attributed to
labor.\29\ Accordingly, the Commission estimates that the average
annual non-labor cost associated with testing will be $1,100,000 [($880
(non-labor test cost per fan) x 1,250 (number of basic models tested
per year)].
---------------------------------------------------------------------------
\28\ At least one large ceiling fan manufacturer has its own
testing facility. See https://www.energystar.gov/ia/partners/manuf_
res/cflabs.pdf.
\29\ As discussed above, the Commission estimates manufacturers
will require approximately three hours to test each new basic model.
Assuming an electrical engineer performs the test at an hourly wage
rate of $40.59, the Commission estimates that approximately $120 of
the total testing cost incurred by ceiling fan manufacturers is
appropriately categorized as a labor cost.
---------------------------------------------------------------------------
ALA's comment also indicated that manufacturers must dispose of
tested units. Assuming that, on average, 50% of the basic models are
tested each year, the Commission estimates that the annual capital cost
of disposal to be $750,000 ($200 disposal cost per fan x 3 tests per
fan x 1,250 basic models tested each year). ALA also indicated that
manufacturers incur costs for shipping fans to third party test labs at
an average of $9 per model. Although such costs are not incurred by
manufacturers which do their own testing, the Commission conservatively
estimates that the cost for shipping fans to third-party test labs will
be $11,250 ($9 per fan x 1,250 models).
Accordingly, the total annual non-labor cost imposed by the Rule,
as applied to ceiling fans, will be approximately $2,282,000, rounded
to
[[Page 78063]]
the nearest thousand ($420,000 for procuring labels + $500 for nominal
paper and postage costs + $1,100,000 for testing + $750,000 for
disposal costs + $11,250 for shipping to third-party test labs).
V. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
requires that the Commission provide an Initial Regulatory Flexibility
Analysis (``IRFA'') with a proposed Rule and a Final Regulatory
Flexibility Analysis (``FRFA''), if any, with the Final Rule, unless
the Commission certifies that the Rule will not have a significant
economic impact on a substantial number of small entities. See 5 U.S.C.
603-605.
The Commission believes it likely that the amendments will not have
a significant economic impact on a substantial number of small
entities. The Commission estimates that these requirements will apply
to about 95 ceiling-fan manufacturers and an additional 200 online and
paper catalog sellers of ceiling fans. We expect that about two-thirds
of these entities will qualify as small businesses under the relevant
thresholds (i.e., 750 or fewer employees). As detailed in the previous
section of this notice, the requirements will impose testing,
recordkeeping, and labeling requirements on affected entities. The
Commission expects that, in some cases, the Rule will have significant
impact on individual small businesses, particularly those that
manufacturer a large number of different fan models. The actual number
of small businesses experiencing such impacts, however, is not likely
to be substantial.
Accordingly, this document serves as notice to the Small Business
Administration of the FTC's certification of no effect. Although the
Commission certifies under the RFA that the Rule proposed in this
notice would not, if promulgated, have a significant impact on a
substantial number of small entities, the Commission has determined,
nonetheless, that it is appropriate to publish an IRFA in order to
inquire into the impact of the proposed Rule on small entities.
Therefore, the Commission has prepared the following analysis:
A. Need For and Objectives of the Rule
The Federal Trade Commission is charged with enforcing the
requirements of 42 U.S.C. 6294, which require the agency to issue this
Rule. The objective of the proposed Rule is to establish energy
labeling requirements for the movement of air by ceiling fans. Section
137 of EPACT 2005 amends section 324 of EPCA to require the Commission
to ``issue, by rule, in accordance with this section, labeling
requirements for the electricity used by ceiling fans to circulate air
in a room.''
B. Significant Issues Raised By Public Comment
No significant issues were raised by public comment related to
small business impacts.
C. Small Entities To Which the Final Rule Will Apply
Under the Small Business Size Standards issued by the Small
Business Administration, household fan manufacturers qualify as small
businesses if they have fewer than 750 employees. The Commission
estimates that fewer than 200 entities subject to the proposed Rule's
requirements qualify as small businesses.
D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The Commission recognizes that the labeling rule will involve some
increased costs for affected parties. Most of these costs will be in
the form of product testing and drafting costs for the label. These
costs are detailed in the Paperwork Reduction Act section of this
notice. The entities affected will include ceiling fan manufacturers
and catalog retailers (including online sellers). The Commission does
not expect that there will be any significant legal, professional, or
training costs to comply with the Rule. The Commission does not expect
that the labeling requirements will impose significant incremental
costs for Web sites or other advertising.
E. Alternatives Considered
The provisions of the Rule directly reflect the requirements of the
statute, and thus leave little room for significant alternatives to
decrease the burden on regulated entities. One commenter, ALA, urged
the Commission to accept data from models already tested under the
ENERGY STAR program without requiring additional 95% confidence level
testing as generally required by DOE. Under the enabling statute, the
energy information disclosed on the label must be based on the test
procedures in DOE's regulations. If DOE determines that such additional
testing is not required or necessary for ENERGY STAR ceiling fans, the
Commission will defer to DOE.
VI. Final Rule Language
List of Subjects in 16 CFR Part 305
Advertising, Energy conservation, Household appliances, Labeling,
Reporting and recordkeeping requirements.
0
For the reasons set out above, the Commission amends 16 CFR Part 305 as
follows:
PART 305--[AMENDED]
0
1. The authority citation for part 305 continues to read as follows:
Authority: 42 U.S.C. 6294.
0
2. Amend Sec. 305.2 by revising paragraph (i), revising paragraph
(o)(21), and adding paragraph (o)(22) to read as follows:
Sec. 305.2 Definitions.
* * * * *
(i) Energy efficiency rating means the following product-specific
energy usage descriptors: annual fuel utilization efficiency (AFUE) for
furnaces; energy efficiency ratio (EER) for room air conditioners;
seasonal energy efficiency ratio (SEER) for the cooling function of
central air conditioners and heat pumps; heating seasonal performance
factor (HSPF) for the heating function of heat pumps; airflow
efficiency for ceiling fans; and, thermal efficiency (TE) for pool
heaters, as these descriptors are determined in accordance with tests
prescribed under section 323 of the Act (42 U.S.C. 6293). These
product-specific energy usage descriptors shall be used in satisfying
all the requirements of this part.
* * * * *
(o) * * *
(21) Ceiling fans.
(22) Any other type of consumer product which the Department of
Energy classifies as a covered product under section 322(b) of the Act
(42 U.S.C. 6292).
* * * * *
0
3. Amend Sec. 305.3 by adding paragraph (s) to read as follows:
Sec. 305.3 Description of covered products.
* * * * *
(s) Ceiling fan means a nonportable device that is suspended from a
ceiling for circulating air via the rotation of fan blades. The
requirements of this part are limited to those ceiling fans for which
the Department of Energy has adopted and published test procedures for
measuring energy usage.
0
4. Add Sec. 305.5(a)(11) to read as follows:
[[Page 78064]]
Sec. 305.5 Determinations of estimated annual energy consumption,
estimated annual operating cost, and energy efficiency rating, and of
water use rate.
(a) * * *
(11) Ceiling Fans--Sec. 430.23.
* * * * *
0
5. Add Sec. 305.7(l) to read as follows:
Sec. 305.7 Determinations of capacity.
* * * * *
(l) Ceiling fans. The capacity shall be the airflow in cubic feet
per minute as determined according to appendix U of 10 CFR part 430,
subpart B.
0
6. Amend Sec. 305.8 to revise paragraphs (a)(1) and (b)(1) to read as
follows:
Sec. 305.8 Submission of data.
(a)(1) Each manufacturer of a covered product (except manufacturers
of fluorescent lamp ballasts, showerheads, faucets, water closets,
urinals, general service fluorescent lamps, medium base compact
fluorescent lamps, or general service incandescent lamps including
incandescent reflector lamps) shall submit annually to the Commission a
report listing the estimated annual energy consumption (for
refrigerators, refrigerator-freezers, freezers, clothes washers,
dishwashers and water heaters) or the energy efficiency rating (for
room air conditioners, central air conditioners, heat pumps, furnaces,
ceiling fans, and pool heaters) for each basic model in current
production, determined according to Sec. 305.5 and statistically
verified according to Sec. 305.6. The report must also list, for each
basic model in current production: the model numbers for each basic
model; the total energy consumption, determined in accordance with
Sec. 305.5, used to calculate the estimated annual energy consumption
or energy efficiency rating; the number of tests performed; and, its
capacity, determined in accordance with Sec. 305.7. For those models
that use more than one energy source or more than one cycle, each
separate amount of energy consumption or energy cost, measured in
accordance with Sec. 305.5, shall be listed in the report. Appendix K
illustrates a suggested reporting format. Starting serial numbers or
other numbers identifying the date of manufacture of covered products
shall be submitted whenever a new basic model is introduced on the
market. For ceiling fans, the report shall contain the fan diameter in
inches and also shall contain efficiency ratings, energy consumption,
and capacity at high speed.
* * * * *
(b)(1) All data required by Sec. 305.8(a) except serial numbers
shall be submitted to the Commission annually, on or before the
following dates:
------------------------------------------------------------------------
Deadline for data
Product category submission
------------------------------------------------------------------------
Refrigerators............................... Aug. 1.
Refrigerator-freezers....................... Aug. 1.
Freezers.................................... Aug. 1.
Central air conditioners.................... July 1.
Heat pumps.................................. July 1.
Dishwashers................................. June 1.
Water heaters............................... May 1.
Room air conditioners....................... May 1.
Furnaces.................................... May 1.
Pool heaters................................ May 1.
Clothes washers............................. Oct. 1.
Fluorescent lamp ballasts................... Mar. 1.
Showerheads................................. Mar. 1.
Faucets..................................... Mar. 1.
Water closets............................... Mar. 1.
Urinals..................................... Mar. 1.
Ceiling fans................................ Mar. 1.
Fluorescent lamps........................... Mar. 1 [Stayed].
Medium Base Compact Fluorescent Lamps....... Mar. 1 [Stayed].
Incandescent Lamps, incl. Reflector Lamps... Mar. 1 [Stayed].
------------------------------------------------------------------------
* * * * *
0
7. Revise Sec. 305.10(a) to read as follows:
Sec. 305.10 Ranges of estimated annual energy consumption and energy
efficiency ratings.
(a) The range of estimated annual energy consumption or energy
efficiency ratings for each covered product (except fluorescent lamp
ballasts, showerheads, faucets, water closets, urinals, or ceiling
fans) shall be taken from the appropriate appendix to this rule in
effect at the time the labels are affixed to the product. The
Commission shall publish revised ranges annually in the Federal
Register, if appropriate, or a statement that the specific prior ranges
are still applicable for the new year. Ranges will be changed if the
estimated annual energy consumption or energy efficiency ratings of the
products within the range change in a way that would alter the upper or
lower estimated annual energy consumption or energy efficiency rating
limits of the range by 15% or more from that previously published. When
a range is revised, all information disseminated after 90 days
following the publication of the revision shall conform to the revised
range. Products that have been labeled prior to the effective date of a
modification under this section need not be relabeled.
* * * * *
0
8. Amend Sec. 305.11 by revising paragraph (a)(1) and adding paragraph
(g) to read as follows:
Sec. 305.11 Labeling for covered products.
(a) Labels for covered products other than fluorescent lamp
ballasts, general service fluorescent lamps, medium base compact
fluorescent lamps, general service incandescent lamps (including
incandescent reflector lamps), showerheads, faucets, water closets,
urinals, and ceiling fans--(1) Layout. All energy labels for each
category of covered product shall use one size, similar colors and
typefaces with consistent positioning of headline, copy and charts to
maintain uniformity for immediate consumer recognition and readability.
Trim size dimensions for all labels shall be as follows: width must be
between 5 \1/4\ inches and 5 \1/2\ inches (13.34 cm. and 13.97 cm.);
length must be 7 \3/8\ inches (18.73 cm.). Copy is to
[[Page 78065]]
be set between 27 picas and 29 picas and copy page should be centered
(right to left and top to bottom). Depth is variable but should follow
closely the prototype labels appearing at the end of this part
illustrating the basic layout. All positioning, spacing, type sizes and
line widths should be similar to and consistent with the prototype
labels.
* * * * *
(g) Ceiling Fans--(1) Content. Any covered product that is a
ceiling fan shall be labeled clearly and conspicuously on the principal
display panel with the following information in order from top to
bottom on the label:
(i) The words ``ENERGY INFORMATION'' shall appear at the top of the
label with the words ``at High Speed'' directly underneath;
(ii) The product's airflow at high speed expressed in cubic feet
per minute and determined pursuant to Sec. 305.5 of this part;
(iii) The product's electricity usage at high speed expressed in
watts and determined pursuant to Sec. 305.5 of this part, including
the phrase ``excludes lights'' as indicated in Ceiling Fan Label
Illustration of Appendix L of this part;
(iv) The product's airflow efficiency rating at high speed
expressed in cubic feet per minute per watt and determined pursuant to
Sec. 305.5 of this part;
(v) The following statement shall appear on the label for fans
fewer than 49 inches in diameter: ``Compare: 36'' to 48'' ceiling fans
have airflow efficiencies ranging from approximately 71 to 86 cubic
feet per minute per watt at high speed.'';
(vi) The following statement shall appear on the label for fans 49
inches or more in diameter: ``Compare: 49'' to 60'' ceiling fans have
airflow efficiencies ranging from approximately 51 to 176 cubic feet
per minute per watt at high speed.''; and
(vii) The following statements shall appear at the bottom of the
label as indicated in Ceiling Fan Label Illustration of Appendix L of
this part: ``Money-Saving Tip: Turn off fan when leaving room.''
(2) Label Size and Text Font. The label shall be four inches wide
and t
