Lamp Labeling 2010 Suppl. SS for final rule_mtd

Supplemental Supporting Statement
Final Lamp Labeling Amendments to the Appliance Labeling Rule
16 C.F.R. Part 305
(OMB No. 3084-0069)
(1)

Necessity for Collecting the Information

The Federal Trade Commission (“Commission” or “FTC”) is promulgating lamp labeling
amendments to the Appliance Labeling Rule (“Rule”), 16 C.F.R. Part 305, in response to
Congressional direction in the Energy Independence and Security Act of 2007, Pub. L. 110-140
(“EISA”). Among other things, EISA directs the Department of Energy (“DOE”) to issue
stringent energy efficiency standards for lighting products. These standards will eliminate low
efficiency incandescent light bulbs from store shelves. The remaining high efficiency light bulbs
will include products widely available now, such as compact fluorescent lamps (“CFLs”), as
well as products that are likely to become increasingly available in the future such as improved
incandescent bulbs and very high efficiency solid-state lighting, e.g., light-emitting diode (LED)
products.
Given these changes, Congress directed the FTC to consider the effectiveness of its
current light bulb disclosure requirements and possible alternative labeling disclosures that could
help consumers understand new high-efficiency bulbs and help them choose bulbs that meet
their needs.1 In particular, the law directs the Commission to consider labeling disclosures that
address consumer needs for information about lighting level, light quality, lamp life, and total
lifecycle cost. Congress required the Commission to complete this effort by June 19, 2010.2
Section 321(c) of the EISA requires DOE, in cooperation with the FTC and other agencies, to
conduct a “proactive national program of consumer awareness, information, and education” to
help consumers understand new light bulb labels and make energy-efficient lighting choices that
meet their needs.
To begin fulfilling this mandate, the Commission published an Advance Notice of
Proposed Rulemaking (“ANPR”) on July 18, 2008 (73 Fed. Reg. 40988) seeking comment, and
then held a public roundtable on September 15, 2008. Commenters and roundtable participants
discussed the effectiveness of current labeling requirements, as well as whether labeling

1

Section 321(b) of EISA amends section 324(a)(2)(C) of the Energy Policy and Conservation Act (EPCA)
(42 U.S.C. 6294(a)(2)(C)). Additional amendments in EISA redesignate 6294(a)(2)(C) as 6294(a)(2)(D) (see
section 324(d) of EISA).
2

Section 321(b) of EISA (42 U.S.C. 6294(a)(2)(D)) also gives the Commission the discretion to “consider
reopening the rulemaking not later than 180 days before the effective dates of the standards for general service
incandescent lamps [implemented by DOE], if the Commission determines that further labeling changes are
needed to help consumers understand lamp alternatives.” The Commission publicly posted the final rule and
issued a related press release on June 18, 2010 (http://www.ftc.gov/opa/2010/06/lightbulbs.shtm). Publication
in the Federal Register occurred on July 19, 2010 (75 Fed. Reg. 41696).

alternatives would help consumers in their purchasing decisions. Finally, the Commission
conducted consumer research to assess potential revisions to its labeling requirements.3
The Commission has considered the effectiveness of current requirements and alternative
approaches for labeling lamps, commonly referred to as light bulbs.4 After reviewing the ANPR
and Roundtable comments, as well as the consumer research, the Commission published a
Notice of Proposed Rulemaking (“NPRM”) on November 10, 2009. The NPRM presented
amendments to the Rule that would require light bulb packages to display brightness and energy
cost information on the front panel and a detailed “Lighting Facts” label on the side or rear. The
amendments also require certain disclosures on the bulbs. These new labeling requirements
should help consumers choose energy efficient bulbs that meet their lighting needs.
(2)

Use of the Information

The primary purpose of the Rule is to encourage consumers to comparison shop for
energy-efficient household products. Consumers will use the required labeling to help them
purchase light bulbs.
(3)

Consideration of Using Improved Technology to Reduce Burden

The amendments permit the use of any technologies that covered firms may wish to
employ and that may reduce the burden of information collection. Disclosing energy usage
information to consumers, however, entails labeling on products or their packaging; as such,
electronic disclosure pursuant to the Government Paperwork Elimination Act, 44 U.S.C. § 3504
note, is impracticable.
(4)

Efforts to Identify Duplication

Under the EPCA (see footnote 1), the FTC does not have discretion to forgo this
rulemaking proceeding. Nonetheless, for most issues covered by the amended Rule, the
Commission staff has not identified any other federal statutes, rules, or policies that would
duplicate the amended Rule. The Commission understands, however, that some states have
mercury disclosure rules that apply to light bulb packages. The Commission intends to ensure
that its mercury disclosure requirements5 are consistent with existing state requirements.

3

See 73 Fed. Reg. 72800 (Dec. 1, 2008); 74 Fed. Reg. 7894 (Feb. 20, 2009). Study results are available at
http://www.ftc.gov/os/comments/lightbulbs/index.shtm.

4

This document uses the terms lamp, light bulb, and bulb interchangeably.

5

The Commission proposes requiring disclosures for light bulbs containing mercury. The EISA amendments
provided the Commission with general authority to consider “alternative labeling approaches that will help
consumers to understand new high efficiency lamp products” including CFLs. See 42 U.S.C.
6294(a)(2)(D)(iii)(I)(bb). The amended language of those disclosures, which would appear on product
(continued...)

2

(5)

Efforts to Minimize Burden on Small Organizations

Although the EPCA requires the Rule to apply to all manufacturers of covered products,
the Commission sought comments in the ANPR about minimizing impact on small businesses.
It received no specific comments responding to that request. While some manufacturers subject
to the Rule’s requirements may be small businesses, staff believes that everything consistent
with the requirements of EPCA has been done to minimize compliance burden. The
Commission has set an effective date for the new requirements that will ensure affected
companies have adequate time to comply with the Rule. Specifically, the final requirements will
become effective one year from their publication in the Federal Register except for the
amendments to § 305.8,6 which will become effective 30 days after publication in the Federal
Register.
(6)

Consequences of Conducting the Collection Less Frequently

Not applicable; there is no flexibility within the framework of EPCA to “collect” less
frequently the information contained in the new labeling requirements.
(7)

Circumstances Requiring Collection Inconsistent With Guidelines

The amended Rule’s information collection requirements are consistent with all
applicable guidelines contained in 5 C.F.R. § 1320.5(d)(2).
(8)

Consultation Outside the Agency

In developing the revised requirements, the Commission has conducted extensive
consultation outside the agency. The Commission has sought comments from the public and
other agencies through its July 2008 ANPR and a public workshop in September 2008. The FTC
staff also conducted consumer research on various label designs in 2009. Finally, in conjunction
with the instant clearance request, the Commission sought public comment on its proposal to
modify the label design and make other miscellaneous changes to the Rule.
The Commission received 24 comments in response to the NPRM.7 As discussed in
more detail in the final rule preamble (see 75 Fed. Reg. at 41698 - 41699), the comments

5

(...continued)
packaging, is consistent with that which already appears on many packages given existing ENERGY STAR
criteria and language recommended by the National Electronic Manufacturers Association to its members. In
addition, the amendments require a mercury disclosure on the bulbs themselves to help consumers properly
dispose of CFLs.
6

Section 305.8 of the Rule requires manufacturers to submit data reports for covered products to the
Commission.

7

The comments are available at http://www.ftc.gov/os/comments/lamplabeling/index.shtm.

3

addressed the proposed product coverage, the proposed package label format and content, “off
label” claims on the package, labeling on the product, reporting and testing requirements,
consumer education, and the compliance burden.8
Two comments addressed the compliance costs of the proposed amendments. One
commenter explained that the proposal “grossly underestimates” the cost of labeling changes but
did not provide any specific details.9 Another commenter provided cost estimates based on past
FDA studies of food label changes, including capital cost estimates for administration, graphic
design, and printing changes on a per product basis.10
In response to the comments, the Commission has revised significantly its burden
estimates, as detailed below under items (12) - (13). In particular, it has added estimated capital
costs associated with package and product label design changes and has increased the time
estimate for manufacturers to add the new disclosures to their product packaging and labeling.
(9)

Payments and Gifts to Respondents
Not applicable.

(10) & (11)

Assurances of Confidentiality/Matters of a Sensitive Nature

The information to be disclosed is of a routine business nature. It is collected and
disseminated by the industry among its membership and made available to the public. No
personal or sensitive information is involved nor is any commercially confidential information
included.
(12)

Estimated Annual Hours Burden and Associated Labor Cost11

Incremental Hours Burden for the Rule amendments: 3,150
Incremental Labor Cost for the Rule amendments: $97,140

8

The comments did not address the issue of lifecycle cost. As explained in section V.B.2.h of the final rule
preamble (see 75 Fed. Reg. at 41707), the Commission is not requiring a lifecycle cost disclosure. See also 74
Fed. Reg. at 57959.
9

See National Electrical Manufacturers Association (Hansen, Dain) (#545052-00026)
(http://www.ftc.gov/os/comments/lamplabeling/545052-00026.pdf).

10

See Vranich, John (#545052-00015) (http://www.ftc.gov/os/comments/lamplabeling/545052-00015.pdf).

11

As detailed in the associated NPRM, the now final amendments include lifting a current stay on
implementation of reporting provisions under the Rule. See 74 Fed. Reg. at 57960. The current PRA
clearance for the Rule’s information collection requirements, however, includes prior burden estimates for
those requirements. Accordingly, the instant burden analysis accounts solely for information collection
provisions not previously implemented or otherwise accounted for in previously cleared PRA submissions.

4

Burden estimates for the amended Rule are based on data previously submitted by
manufacturers to the FTC under the Rule’s existing requirements and on the staff’s general
knowledge of manufacturing practices.
Package and Product Labeling: The amendments require manufacturers to change their
package and product labeling to include new disclosures. The new requirements will require a
one-time adjustment for manufacturers. The Commission estimates that there are 50
manufacturers making approximately 6,000 covered products.12 This adjustment will require an
estimated 100 hours per manufacturer.13 Annualized for a single year reflective of a prospective
3-year PRA clearance, this averages to 33 hours per year. Thus, the label design change will
result in cumulative burden of 1,650 hours (50 manufacturers x 33 hours). In estimating the
associated labor cost, the Commission assumes that the label design change will be implemented
by graphic designers at an hourly wage rate of $22.70 per hour based on Bureau of Labor
Statistics information.14 Thus, the Commission estimates labor cost for this adjustment will total
$37,455 (1,650 hours x $22.70 per hour).
Catalog Disclosures: The amended Rule also requires retailers who sell through catalogs
to disclose information that is required on package labels for lamps. The Commission’s previous
estimates of the rule’s burden on catalog sellers (including Internet sellers) have assumed
conservatively that catalog sellers must enter their data for each product into the catalog each
year (see, e.g,. 71 Fed. Reg. 78057, 78062 (Dec. 28, 2006)). The rule change does not alter that
assumption because the amendments require a one-time change of all products in affected
catalogs. This one-time change is consistent with previous burden estimates. Accordingly, the
Commission does not believe any change is required to the existing burden estimates for catalog
sellers.
Color Temperature: Although the Commission expects that many manufacturers already
conduct testing for correlated color temperature in the normal course of business (e.g., to meet
ENERGY STAR criteria), the final amendments may require manufacturers to conduct
additional testing. The Commission assumes that manufacturers will have to test about half of

12

Based on a review of ENERGY STAR data for products covered under that program, the Commission now
estimates that there are 6,000 basic models covered by the Rule. This is an increase from the FTC’s prior
estimate of 2,100 basic models in the NPRM. See 74 Fed. Reg. at 57963.

13

The Commission has increased its estimate of the hours required to make this change from 80 hours per
manufacturer, as stated in the NPRM, to 100 hours per manufacturer. This change was made in response to
comments from industry members or their representatives that the Commission’s burden estimates were too
low.

14

See http://www.bls.gov/ncs/ncswage2008.htm#Wage_Tables (National Compensation Survey:
Occupational Earnings in the United States 2008, U.S. Department of Labor (August 2009), Bulletin 2720,
Table 3 (“Full-time civilian workers,” mean and median hourly wages), at 3-12).

5

the basic models (or 3,000 basic models) at 0.5 hours for each model for a total of 1,500 hours.15
In calculating the associated labor cost estimate, the Commission assumes that this work will be
implemented by electrical engineers at an hourly wage rate of $39.79 per hour based on Bureau
of Labor Statistics information.16 Thus, the Commission estimates that the new label design
change will result in associated labor costs of approximately $59,685 (1,500 hours x $39.79 per
hour). The Commission does not expect that the final amendments will create any capital or
other non-labor costs for such testing.
(13)

Estimated Annual Capital or Other Non-labor Costs

The Commission estimates that the one-time capital cost of changing lightbulb package
and product labeling will be $6,540,000, determined as follows. Using the cost estimates
suggested by a commenter, the estimate for the one-time capital cost of the package label change
is $5,340,000. This estimate is based on the assumptions that manufacturers will have to change
4,000 of the total 6,000 model packages due to the new requirements17 and that package label
changes for each product will cost $1,335.18 As for product labeling, no commenter provided
specific estimates for the cost involved. Manufacturers place information on products in the
normal course of business. In the absence of cost data, the Commission assumes that the onetime labeling change will cost $200 per model for an estimated total of $1,200,000 (6,000
models x $200). Annualized in the context of a 3-year PRA clearance, these non-labor costs
would average $2,180,000.
(14)

Estimated Cost to Federal Government

Staff believes that the cost to the FTC for administering the amended Rule changes will
be de minimis. Accordingly, Commission staff retains the previous estimate of $90,000 per year
as the cost to the Government for implementing the Rule. This estimate is based on the
assumption that one-half attorney work year and half of a legal technician work year will be
expended.

15

The Commission assumes conservatively that manufacturers will conduct new testing for 3,000 out of the
6,000 estimated covered products.

16

See http://www.bls.gov/ncs/ncswage2008.htm#Wage_Tables (National Compensation Survey:
Occupational Earnings in the United States 2008, U.S. Department of Labor (August 2009), Bulletin 2720,
Table 3 (“Full-time civilian workers,” mean and median hourly wages), at 3-4).

17

Over the course of a year, manufacturers are likely to change approximately 1/3 of their labels during the
normal course of business. The one year compliance period and the notice provided by this proceeding should
minimize the likelihood that manufacturers will have to discard package inventory. See, e.g., Revised January
2003 FDA Labeling Cost Model Final Report, at 4-3
(http://www.foodrisk.org/exclusives/FDA_LCM/downloads/labeling_cost_model.pdf). In addition,
manufacturers may use stickers in lieu of discarding inventory.
18

See Vranich, John comment (#545052-00015) at p. 1.

6

(15)

Program Changes/Adjustments

The revised estimated total hour burden of the amendments is 3,150 hours (1,650 hours
for packaging and labeling + 1,500 hours for additional testing for correlated color temperature)
with associated labor costs of $97,140 and annualized capital or other non-labor costs totaling
$2,180,000.19
(16)

Plans for Tabulation and Publication
Not applicable.

(17)

Failure to Display the OMB Expiration Date
Not applicable.

(18)

Exceptions to Certification
Not applicable.

19

The estimates included in the NPRM were 2,384 hours, $72,062 (labor costs), and $0 (capital costs). See
74 Fed. Reg. at 57963.

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