Energy Labeling 2016 NPRM Supptg Stmt

Supporting Statement
Proposed Amendments to the Energy Labeling Rule
16 C.F.R. Part 305
(OMB No. 3084-0069)
The Federal Trade Commission (“FTC” or “Commission”) seeks comments on issues
related to recent Department of Energy (“DOE”) regulatory actions or new issues raised by
commenters in response to a November 2, 2015 Notice of Proposed Rulemaking (“2015 NPRM”
or “NPRM”)1, including disclosure changes regarding portable air conditioner (“portable AC”)
labeling, large-diameter and high-speed small-diameter ceiling fan labels, electric instantaneous
water heater labeling.2
(1)

Necessity for Collecting the Information

The FTC’s Energy Labeling Rule (“Rule”), issued pursuant to the Energy Policy and
Conservation Act (EPCA),3 requires energy labeling for major household appliances and other
consumer products to help consumers compare competing models. When first published in
1979, the Rule applied to eight product categories: refrigerators, refrigerator-freezers, freezers,
dishwashers, water heaters, clothes washers, room air conditioners, and furnaces. The
Commission has since expanded the Rule’s coverage to include central air conditioners, heat
pumps, plumbing products, lighting products, ceiling fans, certain types of water heaters, and
televisions.
For the instant rulemaking, the Commission proposes amendments to the Energy
Labeling Rule to require labels for portable ACs, large-diameter and high-speed small diameter
ceiling fans, and instantaneous electric water heaters. Additionally, it proposes eliminating
certain marking requirements for plumbing products.
The proposed amendments are designed to: (1) ensure the Rule’s labeling requirements
are consistent with EPCA, which mandates that FTC labels reflect applicable DOE test
procedures when available; and/or (2) improve the Rule by providing consumers with energy
information about additional products not covered previously.
1

80 Fed. Reg. 67,351. The comments received in response to the 2015 NPRM are here:
https://www.ftc.gov/policy/public-comments/initiative-601. The comments included: Association of Home
Appliance Manufacturers (AHAM) (#00016); CSA Group (#00007); California Investor Owned Utilities (California
IOUs) (#00019); Earthjustice (“Joint Commenters”) (#00018); NSF International (#00005); and Plumbing
Manufacturers International (PMI) (#00006). Of these, only the AHAM comment addressed the FTC’s Paperwork
Reduction Act (“PRA”) burden analysis in the NPRM. The AHAM comment is discussed further in response to
items (8) and (12) of this Supporting Statement.
2

On December 11, 2015, OMB filed comment on the associated submission (ICR Reference No: 201511-3084001): “Terms of the previous clearance remain in effect. The FTC should consider comments received regarding the
information collection instrument(s) and provide a response and any necessary adjustments in its next submission to
OMB.” Ultimately, public comments on the November 2015 proposed amendments led to final amendments (81
Fed. Reg. 63,634, September 15, 2016) for some of the earlier proposals, and raised new issues that, paired with
recent DOE regulatory actions, led to the Commission issuing new proposed amendments (81 Fed. Reg. 62,681,
September 12, 2016) for comment.
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42 USC 6291 et seq.

(2)

Use of the Information

The primary purpose of the proposed information requirements is to encourage
consumers to comparison shop for energy-efficient household products.
(3)

Consideration of Using Improved Technology to Reduce Burden

The proposed 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

Commission staff have not identified any other federal statutes, rules, or policies that
would duplicate the proposed Rule.
(5)

Efforts to Minimize Burden on Small Organizations

Although the EPCA requires the Rule to apply to all manufacturers of covered products,
the Commission is seeking comment about minimizing impact on small businesses. While some
manufacturers subject to the Rule’s requirements may be small businesses, staff believes that
everything consistent with EPCA’s requirements has been done to minimize compliance burden.
(6)

Consequences of Conducting the Collection Less Frequently

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

Circumstances Requiring Collection Inconsistent With Guidelines

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

Consultation Outside the Agency

Regarding the 2015 NPRM, AHAM commented that the testing and labeling proposed
would be more burdensome than the estimates included in the FTC’s PRA burden analysis.
Specifically, AHAM estimated: 32 hours per model for testing (8 hours x 4 units, as well as up
to 4 hours for preparing the data); 40 hours per model for reporting; and 40 hours per model for
label preparation. It is unclear whether AHAM’s reporting burden estimate refers to annual
certification reports or to new model reports. Annual reports include all models under current
production (including models previously reported to the database). It is also unclear whether an
estimate of 40 hours for label drafting is per model rather than, perhaps more justifiably, per

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product type or per manufacturer. As noted in the instant NPRM associated with this Supporting
Statement, the Commission seeks clarification regarding AHAM’s estimates.
Finally, in developing the instant proposed requirements, FTC staff have consulted with
DOE staff and is seeking public comments on the proposed requirements and associated PRA
burden analysis.
(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 Cost
Total Incremental Burden of the Proposed Rulemaking: 11,457 hours

Burden estimates below are based on Census data, DOE figures and estimates, general
knowledge of manufacturing practices, and trade association advice and figures. The FTC
estimates that there are about 450 basic models (i.e., units with essentially identical physical and
electrical characteristics) affected by these amendments, including 100 electric instantaneous
water heater models, 130 large-diameter and 70 high-speed small diameter fan models, and 150
portable AC models. In addition, the FTC estimates that there are approximately 2,700,000
ceiling fan units (of the type relevant here), 1,000,000 portable AC units, and 100,000 electric
instantaneous water heaters shipped each year in the U.S.
Reporting: FTC staff estimates that the average reporting burden for manufacturers will
be approximately two minutes to enter label data per basic model. Subject to further public
comment, including AHAM clarification regarding its reporting burden estimate, the FTC
estimates that annual reporting burden is approximately 15 hours [(2 minutes × 450 models)].
Labeling: The FTC additionally seeks further public comment on its burden estimate for
labeling, including AHAM clarification of its proffered estimate for portable AC labeling.
Provisionally, and tied to prior FTC burden estimates for labeling focused on the time to affix
product labels, FTC staff estimates burden to be six seconds per unit; accordingly, 6,334 hours
(six seconds x 3,800,000 total annual product shipments).

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Testing: Manufacturers will require approximately 3 hours to test each new basic ceiling
fan model, 24 hours for each water heater, and 36 hours for portable ACs.4 The FTC estimates
that, on average, 50% of the total basic models are tested each year. Accordingly, the estimated
annual testing burden for the three affected products categories is 4,200 [ceiling fans – 300 (3
hours x 200 x .5); water heaters – 1,200 (24 hours x 100 x .5); and portable ACs – 2,700 (36
hours x 150 x .5)].
Recordkeeping: 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 FTC
estimates that it will take manufacturers one minute per record (i.e., per model) to store the data.
Accordingly, the estimated annual recordkeeping burden would be approximately 8 hours,
rounded up (1 minute x 450 basic models).
Catalog Disclosures: Based upon FTC staff research concerning the number of
manufacturers and online retailers, staff estimates that there are an additional 300 catalog sellers
who are subject to the Rule’s catalog disclosure requirements. Staff estimates further that these
sellers each require approximately 3 hours per year to incorporate the data into their catalogs.
This estimate is based on the assumptions that entry of the required information takes on average
one minute per covered product and that the average online catalog contains approximately 200
covered products relevant here. 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 200 covered 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 900 hours (300 sellers × 3 hours).
Thus, estimated annual burden attributable to the proposed amendments is 11,457 hours
(15 hours for reporting + 6,334 hours for affixing labels + 4,200 hours for testing + 8 hours for
recordkeeping + 900 disclosure hours for catalog sellers).5
Total Associated Labor Cost: $369,280
Staff derived labor costs by applying assumed hourly wages6 to the burden hours
described above. In calculating labor costs, the FTC assumes that electrical engineers perform
test procedures, electronic equipment installers affix labels, and data entry workers enter label
data, catalog disclosures, and perform recordkeeping. Average hourly wages for these labor
4

For portable ACs, the estimate assumes 3 units tested at 8 hours apiece consistent with DOE requirements, with an
additional 4 hours for data analysis. See DOE’s Compliance Certification Management System at
https://www.regulations.doe.gov/ccms.
5

The minor difference here from the resulting incremental burden hours tallied in ROCIS (11,456) is due to
rounding error.
6

The mean hourly wages that follow are drawn from “Occupational Employment and Wages–May 2015,” Bureau
of Labor Statistics (“BLS”), U.S. Department of Labor, Table 1, released March 30, 2016 (“National employment
and wage data from the Occupational Employment Statistics survey by occupation, May 2015”), available at
http://www.bls.gov/news.release/ocwage.t01.htm.

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categories, based on BLS data, are as follows: (1) electrical engineers ($46.80); (2) electronic
equipment installers ($24.22); and (3) data entry workers ($15.79).
Based on the above estimates and assumptions, the total annual labor cost for the five different
categories of burden under the Rule, applied to the affected product categories, is derived as
follows:
Reporting (Data Entry): 15 hours (450 basic models x 2 minutes) x $15.79/hour (data
entry workers) = $237
Labeling (Affixing Labels): 6,334 hours x $24.22 (electronic equipment installers) =
$153,409
Testing: 4,200 hours x $46.80/hour (electrical engineers) = $196,560
Recordkeeping: 8 hours x $15.79/hour (data entry workers) = $126
Catalog Disclosures: 1,200 hours x $15.79/hour (data entry workers) = $18,948
Thus, the total annual labor cost is approximately $369,280.
(13)

Estimated Annual Capital or Other Non-labor Costs

Manufacturers are not likely to require any significant capital costs to comply with the
proposed amendments. Industry members, however, will incur the cost of printing labels for
each covered unit. The estimated label cost, based on $.03 per label, is $114,000 (3,800,000 x
$.03).
(14)

Estimated Cost to Federal Government

Staff believes that the cost to the FTC for administering the proposed Rule changes will
be de minimis. Accordingly, FTC 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)

Program Changes/Adjustments

The proposed amendments will result in an estimated additional 11,457 burden hours,
annualized, and cumulative of all affected manufacturers,$369,280 in labor costs, and $114,000
in capital/non-labor costs.
(16)

Plans for Tabulation and Publication
Not applicable.

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(17)

Failure to Display the OMB Expiration Date
Not applicable.

(18)

Exceptions to Certification
Not applicable.

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