Wool SS - 2012 - FINAL_mtd

Supporting Statement for Information Collection Provisions of Rules and
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 Rules and Regulations (“Wool Rules” or “Rules”), 16 C.F.R. § 300,
impose disclosure requirements with respect to wearing apparel and other products 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 Wool Rules 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, and 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 sections of the 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.
Recordkeeping
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(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 section is used by manufacturers
and marketers of covered products. The records serve as support for the fiber content claims
made on labels and provide a deterrent against misbranding. The records are also available to
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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 sections of the 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 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
format that facilitated informed buying decisions in the marketplace. The record collection and
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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 sections of the 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 section of the Rules 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 the Rules is consistent with all applicable guidelines
contained in 5 C.F.R. § 1320.5(d)(2).
8.

Consultation Outside the Agency

Most sections of the Wool Rules 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 Association. Further, Commission staff has regular contact
with companies subject to the Wool Rules, both large multi-national 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 sections of the Rules pertaining to labeling and mail order advertising, virtually all
covered companies: (1) are aware of the Rules; (2) know that the FTC will freely provide copies
of the Wool Act and Rules 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 the Rules, in accordance with 5 C.F.R. § 1320.8(d). See 76 Fed.
Reg. 77,230 (December 12, 2011) (no comments were received). Consistent with 5 C.F.R.
§ 1320.12(c), it is doing so again contemporaneous with this submission.
The Commission has also initiated a review of the Wool Rules under its regulatory
review program. See 77 Fed. Reg. 4,498 (January 30, 2012).1 Among other things, the
Commission seeks comment on the overall costs, benefits, necessity, and regulatory and
economic impact of, and possible modifications to, the Wool Rules. The Commission also seeks
comment on how it should modify the Rules to implement the Wool Suit Fabric Labeling
Fairness and International Standards Conforming Act (“Conforming Act”).2 This legislation
declared that specified wool products manufactured on or after January 1, 2007, including
cashmere, are misbranded if the average diameter of their fibers does not meet certain standards.
The Conforming Act sets the maximum average diameter for 18 different “Super” designations
of wool products by average fiber diameter. For example, a wool product is misbranded if it is
identified as “Super 80’s” or “80’s” unless the average diameter of the wool fibers in the product
is 19.75 microns or finer.3 It also authorizes the Commission to adopt additional standards or
deviations for these wool products.4

1

See http://www.ftc.gov/opa/2012/01/woolproducts.shtm.

2

Public Law 109-428 (Dec. 20, 2006), codified at 15 U.S.C. § 68b(a)(5)-(6).

3

15 U.S.C. § 68b(a)(5)(A).

4

15 U.S.C. § 68b(a)(5). In addition, the Conforming Act provides that a product is
misbranded as cashmere if: (1) it does not consist of the fine (dehaired) undercoat fibers
produced by a cashmere goat; (2) the average diameter of the fiber exceeds 19 microns; or (3) it
contains more than 3% by weight of cashmere fibers with average diameters exceeding 30
microns. 15 U.S.C. § 68b(a)(6)(A) - (C). Furthermore, the average fiber diameter for each
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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
(80,000 recordkeeping hours + 360,000 disclosure hours)

Recordkeeping: Staff estimates that approximately 4,000 wool firms are subject to the
Wool Rules’ 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 Wool Rules’ disclosure requirements. Staff estimates
the burden of determining label content to be 15 hours per year per firm, or a total of 120,000
hours, and the burden of drafting and ordering labels to be 5 hours per firm 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 semi-automated 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 the burden estimates set forth above.
Associated labor cost5: $5,920,000 (solely relating to labor costs). The chart below
summarizes the total estimated costs.
Task

Hourly Rate

Burden Hours

Labor Cost

Determine label content

$

23.00

120,000

$2,760,000

Draft and order labels

$

18.00

40,000

$720,000

cashmere product may be subject to a coefficient of variation around the mean that does not
exceed 24 percent. 15 U.S.C. § 68b(a)(6).
5

Unless otherwise indicated, staff’s hourly labor rates are based on information from the
U.S. Department of Labor, Bureau of Labor Statistics.
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Task

Hourly Rate

Burden Hours

Labor Cost

Attach labels

$

5.006

200,000

$1,000,000

Recordkeeping

$

18.00

80,000

$1,440,000

TOTAL
13.

$5,920,000

Estimated Capital or Other Non-Labor Costs

Staff believes that there are no current start-up costs or other capital costs associated with
the Wool Rules. 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 Rules. Based on knowledge of the industry, staff believes that much of the
information required by the Wool Act and Rules 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 Rules.
14.

Estimated Cost to the Federal Government

Staff estimates a representative year’s cost imposed by the Rules during the course of the
three-year clearance period sought will be $50,000. Attorney, clerical, and other support staff
costs are included in this estimate, as are employee benefits.
15.

Program Changes or Adjustments

There is no program change nor adjustment. The FTC staff retains the same annual
estimate of 440,000 burden hours from the most recent 2009 submission.

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For imported products, the labels generally are attached in the country where the
products 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 to attach labels, staff has calculated a weighted average hourly wage
of $5 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 the year ending in September
2011 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 2009 data from the U.S. Department of Labor, Bureau of
International Labor Affairs. See Table 1.1 Production Workers: Indexes of hourly compensation
costs in manufacturing, U.S. dollar basis, 1975-2009 (Index, U.S. = 100) available at:
ftp://ftp.bls.gov/pub/suppl/ichcc.ichccpwsuppt1_1.txt.
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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.

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