WoolSS-2008-Final_mtd

Supporting Statement for Information Collection Provisions of
Regulations Under the Wool Products Labeling Act of 1939
16 C.F.R. § 300
(OMB Control #: 3084-0100)
1.

Necessity for Collecting the Information

The Wool Products Labeling Act (“Wool Act” or “Act”), 15 U.S.C. § 68 et seq., and its
implementing Wool Act Regulations, 16 C.F.R. § 300, impose disclosure requirements with
respect to wearing apparel containing wool fiber. The purpose of the Act is “[t]o protect
producers, manufacturers, and consumers from the unrevealed presence of substitutes and
mixtures in spun, woven, knitted, felted, or otherwise manufactured wool products.” Section
6(a) of the Act authorizes and directs the Federal Trade Commission (“FTC” or “Commission”)
“to make rules and regulations for the manner and form of disclosing information required by
this Act, and for segregation of such information for different portions of a wool product as may
be necessary to avoid deception or confusion, and to make such further rules and regulations
under and in pursuance of the terms of this Act as may be necessary and proper for
administration and enforcement.” Section 6(b) of the Act requires that every manufacturer of
wool products maintain proper records showing the fiber content of all wool products made by
the manufacturer, and preserve such records for at least three years. Finally, Section 4(e) of the
Act requires that advertisements of wool products in any mail order promotional material that is
used in the direct sale or direct offering for sale of such wool product state in a clear and
conspicuous manner that such wool product is processed or manufactured in the United States of
America, or imported, or both.
The rules that implement the Wool Act provide for the collection of information and fall
into the following three categories. These category designations will be used throughout this
supporting statement.
Labeling
(16 C.F.R. §§ 300.2, 300.3, 300.5, 300.10, 300.11, 300.12,
300.13, 300.14, 300.15, 300.25, 300.25a)
Section 300.2 sets forth the general requirement that “[e]ach and every wool product
subject to the Act shall be marked by a stamp, tag, label or other means of identification, in
conformity with the requirements of the Act and the rules and regulations thereunder.” Other
sections of the rules prescribe the appropriate labeling for various factual situations. In brief, the
rules call for each covered wool product to contain a label that discloses: (1) fiber content,
(2) country of origin, and (3) the identity of the manufacturer or other marketer of the product.
The various rules that comprise this category merely implement Section 6(a) of the Act;
disclosures required pursuant to the Act are deemed necessary because they provide material
information about the products. Lacking this information, potential purchasers could not make
informed buying decisions.

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Recordkeeping
(16 C.F.R. § 300.31)
Section 300.31, implementing Section 6(b) of the Wool Act, requires manufacturers and
those marketers who substitute labels (e.g., resellers) to maintain records that reflect the basis
relied upon in making fiber content and country of origin disclosures shown on labels attached to
wool products. Records must be retained for three years, and their purpose is “to permit a
determination that the requirements of the Act and Regulations have been met and to establish a
traceable line of continuity from raw material through processing to finished product.” 16
C.F.R. § 300.31(c).
Country of Origin Disclosure in Mail Order Advertising
(16 C.F.R. § 300.25a)
Section 300.25a implements Section 4(e) of the Wool Act, which requires each item
description of a covered product offered for sale in catalog or mail order promotional material to
include a clear and conspicuous disclosure of whether “such wool product is processed or
manufactured in the United States of America, or imported, or both.”
Application to Exclude Products
(16 C.F.R. § 300.35)
Section 4(d) of the Act permits the FTC to determine whether or not these disclosures
must be made for certain classes of articles or products. Thus, the FTC may determine that
representations of fiber content are customarily made as to a certain class of linings, paddings,
stiffenings, trimmings, or facing, and that the disclosures must be made as to that class. The
FTC may also determine that certain products have insignificant or inconsequential textile
content and that disclosures as to those products need not be made. Any person may apply to the
FTC for a hearing to make such a determination. Such an application must include a detailed
technical description of the class or classes of articles or products at issue.
2.

Use of the Information
Labeling

Potential purchasers, both consumers and businesses, rely upon the disclosed fiber
content and country of origin information to make informed buying decisions in the marketplace.
Disclosure of company identification is used by the Commission for enforcement purposes, i.e.,
to identify the manufacturer of a misbranded item. It is also used by other companies seeking to
identify the manufacturer or distributor of a particular item for business purposes.
Recordkeeping
The information collected pursuant to the recordkeeping rule is used by manufacturers
and marketers of covered products. The records serve as support for the fiber content claims
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made on labels and provide a deterrent against misbranding. The records are also available to
the Commission and may be used in an investigation or law enforcement action.
Country of Origin Disclosure in Mail Order Advertising
Section 300.25a ensures that consumers who purchase covered products by catalog or
other mail order sale, who cannot examine the label on the product before purchase, will be
apprised of whether a covered product offered for sale by catalog or other mail order
promotional material is made in the U.S.A., imported, or both. The records are also available to
the Commission and may be used in an investigation or law enforcement action.
Application to Exclude Products
The Commission would use information contained in such an application to determine
whether it would be in the public interest to hold a Section 4(d) Wool Act hearing. If such a
hearing results, the information in the application would be used in the hearing as well.
3.

Consideration of the Use of Improved Information Technology to Reduce Burden

The labeling, recordkeeping, and mail order advertising rules merely set forth certain
performance standards. For example, fiber content labels must clearly and conspicuously
disclose the required information. However, companies may avail themselves of any improved
technology (e.g., mechanization, typesetting, printing) in meeting these performance standards.
In addition, covered entities have flexibility with regard to the placement of information on
labels and the attachment of labels to products.
For information that is required to be disclosed on wool product labels, an electronic
disclosure option, pursuant to the Government Paperwork Elimination Act, Pub. L. No. 105-277,
Title XVII, 112 Stat. 2681-749 (“GPEA”), is impracticable. For non-labeling disclosures,
however, the Commission, in compliance with the Act, has previously amended relevant Wool
Rules definitions so that they are either format-neutral or explicitly recognize and permit such
disclosures in electronic format. See 16 C.F.R. § 300.1(j) (incorporating by reference 16 C.F.R.
§ 303.1(h) (“invoice” or “invoice or other paper” – issued “in writing or in some other form
capable of being read and preserved in a tangible form”) and § 300.1(h) (“mail order catalog” or
“mail order promotional material” – materials disseminated “in print or by electronic means”)).
Likewise, the rules permit the maintenance of relevant records in any format, including
electronic, that a manufacturer chooses. 16 C.F.R. § 300.31.
4.

Efforts to Identify Duplication/Availability of Similar Information

There is no other federal law or regulation that requires the collection of information
contained in the Wool Act or its implementing rules.
The Act and rules were placed into effect because companies were not voluntarily
providing material product information or were not providing it in a meaningful, standardized
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format that facilitated informed buying decisions in the marketplace. The record collection and
retention requirements simply require recording and maintaining the same type of general
information that most covered companies now routinely undertake in the normal course of
business.
5.

Efforts to Minimize Burden on Small Businesses

The Wool Act allows the Commission no latitude to treat small businesses differently.
The Act specifically requires “any person” marketing covered products to label and keep
records; “person” is defined as, “. . . an individual, partnership, corporation, association or any
other form of business enterprise” (emphasis added). Thus, Congress intended to cover all
concerns, of whatever size, engaged in the marketing of wool products. The regulatory
requirements are designed to impose the minimum possible burden on the persons who complete
them. The burden on small companies with respect to the labeling, recordkeeping, and mail
order advertising rules is minimal, however, because their suppliers (e.g., mills, wholesalers)
must provide them with accurate information regarding fiber content and country of origin.
6.

Consequences of Conducting Collection Less Frequently

The disclosure of information required in labeling applies to each covered product in the
marketplace. If disclosure were not required in every case, the objective of informing purchasers
of important, material information would be defeated.
The recordkeeping rule requires manufacturers and those who substitute labels (e.g.,
resellers) to record and retain substantiation for the labeling claims pertaining to covered
products. In the absence of this requirement, the country of origin disclosure would be
unsupported and the chain of fiber content continuity from raw material through finished product
would be lost. This would remove an important deterrent against misbranding and would
complicate any Commission inquiry or enforcement action.
If origin information were not required in mail order advertisements, consumers would
not receive any country of origin information until after they had already purchased a product.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The collection of information under all rules considered herein is consistent with all
applicable guidelines contained in 5 C.F.R. § 1320.5(d)(2).
8.

Consultation Outside the Agency

Most of the rules that relate to this statement have been in effect for more than three
decades. Before their promulgation, the Commission sought and considered input of affected
individual companies and trade associations at each step in the rulemaking proceedings.
Over the years the FTC has had recurring contacts with affected companies and major
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trade associations. For example, Commission staff has an on-going liaison relationship with the
American Apparel and Footwear Manufacturers Association. Further, Commission staff has
daily contact with companies subject to these information collection rules, both large multinational corporations and small businesses entering the market.
Based on recurring contacts with covered companies and the FTC’s own experience (e.g.,
from conducting routine compliance investigations), the Commission staff concludes that, with
regard to the rules pertaining to labeling and mail order advertising, virtually all covered
companies: (1) are aware of the specific regulations; (2) know that the FTC will freely provide
copies of the Wool Act, its implementing regulations and additional explanatory materials upon
request; and (3) consider the rules to be clear and reasonable. Experience further indicates that
the information collection required merely calls for minimal, routine records that generally
would be maintained by a responsible company, even absent the provision.
As it has in the past, Commission staff sought public comment in connection with its
latest PRA clearance request for these regulations, in accordance with 5 C.F.R. § 1320.8(d). See
73 Fed. Reg. 64948 (October 31, 2008) (no comments were received). Consistent with 5 C.F.R.
§ 1320.12(c), it is doing so again contemporaneous with this submission.
9.

Payments of Gifts to Respondents
Not applicable.

10. & 11.

Assurances of Confidentiality and Matters of a Sensitive Nature

The records involved do not concern matters of a sensitive nature.
12.

Estimated Annual Hours Burden: 440,000 hours, rounded to the nearest thousand

Recordkeeping: Staff estimates that approximately 4,000 wool firms are subject to the
regulations’ recordkeeping requirements. Based on an average annual burden of 20 hours per
firm, the total recordkeeping burden is 80,000 hours.
Disclosure: Approximately 8,000 wool firms, producing or importing about 600,000,000
wool products annually, are subject to the regulations’ disclosure requirements. Staff estimates
the burden of determining label content to be 15 hours per year per respondent, or a total of
120,000 hours, and the burden of drafting and ordering labels to be 5 hours per respondent per
year, or a total of 40,000 hours. Staff believes that the process of attaching labels is now fully
automated and integrated into other production steps for about 40 percent of all affected
products. For the remaining 360,000,000 items (60 percent of 600,000,000), the process is semiautomated and requires an average of approximately two seconds per item, for a total of 200,000
hours per year. Thus, the total estimated annual burden for all respondents is 360,000 hours
(120,000 hours for determining label content + 40,000 hours to draft and order labels + 200,000
hours to attach labels). Staff believes that any additional burden associated with advertising
disclosure requirements would be minimal (less than 10,000 hours) and can be subsumed within
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the burden estimates set forth above.
Associated labor cost1: $5,702,000, rounded to the nearest thousand
Task

Hourly Rate

Burden Hours

Labor Cost

Determine label content

$

22.00

120,000

$2,640,000

Draft and order labels

$

16.27

40,000

$650,800

Attach labels

$

5.552

200,000

$1,110,000

Recordkeeping

$

16.27

80,000

$1,301,600

TOTAL
13.

$5,702,400

Estimated Capital or Other Non-Labor Costs

Staff believes that there are no current start-up costs or other capital costs associated with
the regulations. Because the labeling of wool products has been an integral part of the
manufacturing process for decades, manufacturers have in place the capital equipment necessary
to comply with the regulations. Based on knowledge of the industry, staff believes that much of
the information required by the Wool Act and its implementing regulations would be included
on the product label even absent their requirements. Similarly, recordkeeping and advertising
disclosures are tasks performed in the ordinary course of business so that covered firms would
incur no additional capital or other non-labor costs as a result of the regulations.

1

Unless otherwise indicated, staff’s hourly labor rates are based on information from the

U.S. Department of Labor, Bureau of Labor Statistics.
2

For products that are imported, this work generally is done in the country where they
are manufactured. According to information compiled by an industry trade association using
data from the International Trade Commission, the U.S. Customs Service, and the U.S. Census
Bureau, approximately 95% of apparel and other textile products used in the United States is
imported. With the remaining 5% attributable to U.S. production at an approximate domestic
hourly wage of $9.50 to attach labels, staff has calculated a weighted average hourly wage of
$5.55 per hour attributable to U.S. and foreign labor combined. The estimated percentage of
imports supplied by particular countries is based on trade data for 2007 compiled by the Office
of Textiles and Apparel, International Trade Administration, U.S. Department of Commerce.
Wages in major textile exporting countries, factored into the above hourly wage estimate, were
based on 2006 data from the U.S. Department of Labor, Bureau of International Labor Affairs.
See “International Comparisons of Hourly Compensation Costs for Production Workers in
Manufacturing,” Table 1, available at: http://www.bls.gov/fls/hcpwsupptabtoc.htm.
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14.

Estimated Cost to the Federal Government

Staff estimates a representative year’s cost imposed by the rule during the course of the
three-year clearance period sought will be $14,855. Attorney, clerical, and other support
staff costs are included in this estimate, as are employee benefits.
15.

Program Changes or Adjustments

FTC staff has adjusted upward its prior hours burden estimate of 407,000 hours, for
which the Commission currently has OMB clearance, to 440,000 hours. This 33,000 hour
increase is attributable to a rise in the estimated number of wool products subject to the rules’
recordkeeping requirements (from 500,000 products to 600,000).
16.

Statistical Use of Information

There are no plans to publish, for statistical use, any information required by the Wool
Act and Rules.
17.

Display of Expiration Date for OMB Approval
Not applicable.

18.

Exceptions to the Certification for Paperwork Reduction Act Submissions
Not applicable.

Dated: February 2009

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