FTC Proposes Revisions to Energy Labeling Rule Requirements

by Elisabeth Ulmer

In June 2014, the Federal Trade Commission (“FTC”) proposed a rule to amend its labeling requirements under the Energy Labeling Rule.  The FTC intends “to expand coverage of the Lighting Facts label, change the current label categories for refrigerators, revise the ceiling fan label design, and require room air conditioner labels on packaging instead of the units themselves.”

The Energy Labeling Rule (“ELR”), formerly known as the Appliance Labeling Rule, was issued in 1979 under the Energy Policy and Conservation Act (“EPCA”).  The EPCA may require labeling on products if it is “likely to assist consumers in making purchasing decisions.”  The ELR establishes requirements for consumer appliance products in commerce, which is defined in the EPCA.  Products must include, as applicable, information about operating cost, water use, energy consumption, energy efficiency, and energy cost.

The FTC first sought comment on revisions to the labeling requirements of the ELR in a Notice of Proposed Rulemaking (“NPRM”) in March 2012.  In this NPRM, the FTC also recommended new labels to assist consumers in comparing refrigerators and clothes washers.  In the proposed rule, the FTC addresses the concerns of the public’s comments on the NPRM and suggests other amendments.

For instance, the FTC recommended requiring labels for more types of light bulbs, including all screw-based bulbs and GU-10 and GU-24 pin-based bulbs.  These labels would offer information about energy cost, brightness, and bulb life.  In the comments on the NPRM, some industry members were concerned about fitting required disclosures on packages and lamps, and thus recommended smaller labels and abbreviated content.  The FTC proposes a smaller, single label option for certain specialty use bulbs that come in small packages.  This label would contain information about lumens, energy cost, and bulb life, but not watts and light appearance.

Additionally, the proposed rule discusses the potential of an online label database on the Department of Energy’s website that will benefit both consumers and retailers.  Nevertheless, the FTC declared that it would not abandon physical labels for now because “not all consumers have online access, and not all those who do conduct online research before making purchase decisions.”

In order to pursue more durable labels for clothes washers, dishwashers, and refrigerators, the FTC and commenters debated hang tags versus adhesive labels.  Downsides of are that hang tags can easily come loose, while adhesive labels can leave behind unwanted residue.  The FTC ultimately decided to retain both kinds of labels as options, but may require adhesive labels in the future if the proposed improvements to hang tags do not sufficiently decrease the number of missing labels.

For ceiling fans, current labeling includes information on airflow, energy use, and energy efficiency at high speed.  However, the FTC proposes that new ceiling fan labels highlight the annual energy cost because, according to research on consumer preferences, energy cost is “a clear, understandable tool” for energy performance comparison by consumers.  Manufacturers would have two years to change their packaging.

Under the ELR, the FTC did not require labels for clothes dryers because the annual energy cost difference between models was only $5.  Thus, the FTC determined that the costs of energy labels would “far outweigh the potential benefits.”  Currently, according to Department of Energy tests, the annual energy cost difference between electric models is at most $11.  Thus, the FTC maintains that labeling would not have much of an impact on consumer choices, even taking into account the possibility of consumers using the energy information to compare the different fuels in clothes dryers or to decide to hang dry their clothes instead.  However, if more efficient dryers become widely available or if future testing methods reveal higher energy cost differences, the FTC may then decide to require labels for clothes dryers.

The comment period for this proposed rule closed on August 18th.  The FTC received no comments and will publish appropriate final amendments.