Energy and Water Use Labeling for Consumer Products Under the Energy Policy and Conservation Act (Energy Labeling Rule)

AGENCY:

Federal Trade Commission (“FTC” or “Commission”).

ACTION:

Final rule.

SUMMARY:

Consistent with proposed amendments published in a June 18, 2014 Supplemental Notice of Proposed Rulemaking (SNPRM), the Commission updates its label requirements for heating and cooling equipment and removes information from furnace labels about regional conservation standards.

DATES:

The amendments published in this document will become effective on April 6, 2015.

ADDRESSES:

Relevant portions of the proceeding, including this document, are available at the Commission's Web site, www.ftc.gov.

FOR FURTHER INFORMATION CONTACT:

Hampton Newsome, (202) 326-2889, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

The Commission issued the Energy Labeling Rule (“Rule”) in 1979, pursuant to the Energy Policy and Conservation Act of 1975 (EPCA). The Rule requires energy labeling for major home appliances and other consumer products to help consumers compare competing models. When first published, the Rule applied to eight categories: Refrigerators, refrigerator-freezers, freezers, dishwashers, water heaters, clothes washers, room air conditioners, and furnaces. The Commission subsequently expanded the Rule's coverage to include central air conditioners, heat pumps, plumbing products, lighting products, ceiling fans, and televisions. The Commission is separately reviewing the entire Rule.

The Rule requires manufacturers to attach yellow EnergyGuide labels for many of the covered products and prohibits retailers from removing the labels or rendering them illegible. In addition, the Rule directs sellers, including retailers, to post label information on Web sites and in paper catalogs from which consumers can order products. EnergyGuide labels for covered products contain three key disclosures: Estimated annual energy cost (for most products); a product's energy consumption or energy efficiency rating as determined from Department of Energy (DOE) test procedures; and a comparability range displaying the highest and lowest energy costs or efficiency ratings for all similar models. For energy cost calculations, the Rule specifies national average costs for applicable energy sources (e.g., electricity, natural gas, oil) as calculated by DOE. Under the Rule, the Commission periodically updates comparability range and annual energy cost information. The Commission updates the range information based on manufacturer data submitted pursuant to the Rule's reporting requirements.

II. Updates to Heating and Cooling Labels

Summary: The Commission amends its label requirements for heating and cooling equipment consistent with proposed amendments in a Supplemental Notice of Proposed Rulemaking (SNPRM) published on June 18, 2014 (79 FR 34642). As detailed below, these amendments update labels for furnaces and boilers, including range information, remove information on furnace labels about regional standards, and remove mandatory capacity disclosures for all heating and cooling equipment. The Commission will address other matters discussed in the June 18, 2014 SNPRM in a future notice.

Background: The Commission issued revised heating and cooling equipment labels in 2013 to provide installers and consumers with information about new regional standards issued by DOE for some of those products. The new FTC labels for split-system and single-package central air conditioners, gas furnaces, and non-weatherized mobile home furnaces included information about compliance with the regional standards in the form of statements and maps illustrating regions where specific models can be installed under the DOE rules. The new labels also included a Web site link, model number, and capacity information for all furnaces and central air conditioners (regardless of whether subject to regional or uniform national standards) to help consumers access DOE-generated cost information online.

However, following issuance of the new FTC requirements, a legal settlement vacated the DOE regional furnace standards. Because the Commission tied implementation for the new labels (including labels for products subject to uniform national standards) to the DOE regional standards dates, the settlement had the effect of postponing indefinitely the FTC label updates for most gas furnaces, oil furnaces, boilers, and electric furnaces.

In the wake of the settlement, DOE is not likely to issue revised regional furnace standards in the immediate future. Given these circumstances, the Commission, in its June 18, 2014 SNPRM, proposed to address the need for current information by updating the energy use ranges for boilers and oil-furnace labels and ranges. Furthermore, the Commission proposed to update the labels and ranges for all furnaces and omit the obsolete regional standards information for those products. Consistent with the new labels required by the February 6, 2013 amendments, the proposed label would include a prominent link to an online energy cost calculator provided by the DOE Web site (productinfo.energy.gov). This calculator will provide a clear, understandable tool to allow consumers to compare energy costs of different models. To coincide with new efficiency standards for gas furnaces, the Commission proposed making the revised gas furnace labels effective on January 1, 2015.

The Commission also proposed eliminating capacity disclosures on EnergyGuide labels for heating and cooling equipment, but maintaining model numbers. Prior to the February 6, 2013 amendments, the EnergyGuide labels for furnaces and central air conditioners did not require capacity disclosures. In 2013, the Commission added a capacity disclosure to help consumers access cost information posted on the DOE Web site. In the SNPRM (79 FR at 34652-34653), the Commission proposed eliminating this new requirement because the capacity for split-system air conditioners varies depending on the condenser-coil combination. Therefore, a capacity disclosure requirement could raise implementation problems and mislead consumers for some products. Under the proposal, consumers could use model numbers to access specific cost and capacity information for various products, including condenser-coil combinations, through the DOE Web site.

Comments: Many comments supported the elimination of information about the vacated DOE regional standards from the label. No comments opposed this proposal.

The comments provided differing views on the Commission's proposal to eliminate capacity disclosures for heating and cooling products. AHRI, which filed comments (#563707-00010) on the issue earlier in the proceeding, and Goodman agreed with the proposal. AHRI explained that the EnergyGuide label only appears on a split-system air conditioner's condensing unit. Because manufacturers cannot predict which coil will be paired with a particular condenser, they cannot predict the system's capacity rating. In lieu of capacity ratings, AHRI suggested that the FTC allow manufacturers to print basic model numbers on their EnergyGuide labels, which consumers can use to access the capacity information on DOE's database.

In contrast, several efficiency groups urged the Commission to retain the model capacity disclosure. The groups, which understood the proposed change to be limited to split-system air conditioners, argued that retaining the disclosure would be more informative and more consistent with disclosures for other products, such as oil furnaces. They urged consideration of a range of capacities for split-system units. The groups also noted that the DOE Web site link on the FTC label is not yet operable and explained that DOE does not collect heating capacity information for split-system heat pumps. The groups urged the FTC to ensure that the DOE Web site is updated appropriately.

Finally, several comments from natural gas industry groups urged the Commission to prohibit the ENERGY STAR logo on certain furnaces. Since 2012, furnace models rated between a 90 and a 95 annual fuel utilization efficiency (AFUE) qualify for the ENERGY STAR program when installed in southern states. The ENERGY STAR logo for these models contains a map denoting those states accompanied by the ENERGY STAR symbol and the words “qualified only in.” The commenters argued that this ENERGY STAR logo incorrectly implies a regional minimum efficiency standard exists for furnaces and thus will lead to consumer confusion. Therefore, APGA suggested that labels bearing the ENERGY STAR logo contain the following disclosure: “This furnace qualifies for the Department of Energy (DOE) and Environmental Protections Agency's (EPA) volunteer ENERGY STAR program.” AGA, on the other hand, urged the Commission simply to prohibit the ENERGY STAR logo on furnace labels. It also questioned whether the Commission has authority to allow the ENERGY STAR logo on EnergyGuide labels.

Discussion: Consistent with its proposal in the SNPRM, the Commission updates furnace and boiler labels to include new range information, provide the link to the DOE Web site for cost information, and eliminate the capacity disclosure requirement. In the absence of regional furnace standards following the DOE Settlement, the amendments eliminate any disclosures related to regional standards for such products. If DOE issues revised regional standards in the future, the Commission will revisit whether and how to require label disclosures relating to regional standards. To ensure industry members have adequate time to implement these changes, the effective date for these amendments is April 6, 2015.

The amendments no longer require capacity disclosures for heating and cooling equipment labels. Instead, the amendments make capacity disclosures optional for all such equipment except for split-system air conditioners, whose labels may not contain capacity disclosures. The Commission issues these amendments for the following reasons. First, as noted in the SNPRM, the installed capacity of split-system air conditioners varies depending on the condenser-coil combination. Accordingly, a capacity requirement for those products is difficult to implement and could mislead or confuse consumers, even if a range of capacity is disclosed. Second, although the Commission initially explained that consumers need capacity information on the label to access cost information on the DOE Web site (78 FR at 8365), the Commission has since learned that the full model number of the installed system is adequate for all heating and cooling equipment. Finally, the absence of a capacity disclosure is unlikely to have a significant impact for typical consumers. Installation professionals use capacity numbers (expressed in Btu/h) to ensure a particular model is suitable for a consumer's home. Consumers seeking capacity information for a particular model can obtain it from their installer contractor or from the DOE Web site. However, since some manufacturers may want to retain capacity information on their labels or may not desire to change recently updated labels to remove this information, the final rule makes the capacity disclosures optional for all models except split-systems, where such disclosures may cause confusion.

The final rule does not prohibit the ENERGY STAR logo on the EnergyGuide label for furnaces. The Commission has permitted the ENERGY STAR logo on EnergyGuide labels since April 3, 2000 (65 FR 17554). As the Commission explained, the combination of the EnergyGuide's detailed efficiency rating disclosure and the ENERGY STAR logo provides a robust source of energy efficiency information to consumers. Without clear evidence indicating the logo suggests the existence of a regional standard to consumers, the Commission does not propose eliminating or qualifying this important information. In addition, installers can remedy any confusion that may stem from the ENERGY STAR logo during their discussions with customers, which typically occur as part of the sale of this type of equipment. Finally, the logo is optional under the Rule. If manufacturers believe it creates confusion for consumers examining the label, they may choose not to include it.

III. Paperwork Reduction Act

The current Rule contains recordkeeping, disclosure, testing, and reporting requirements that constitute information collection requirements as defined by 5 CFR 1320.3(c), the definitional provision within the Office of Management and Budget (OMB) regulations that implement the Paperwork Reduction Act (PRA). OMB has approved the Rule's existing information collection requirements through May 31, 2017 (OMB Control No. 3084-0069). The amendments do not change the substance or frequency of the recordkeeping, disclosure, or reporting requirements and, therefore, do not require further OMB clearance.

IV. Regulatory Flexibility Act

The provisions of the Regulatory Flexibility Act relating to a Regulatory Flexibility Act analysis (5 U.S.C. 603-604) are not applicable to this proceeding because the amendments do not impose any new obligations on entities regulated by the Energy Labeling Rule. As explained in detail elsewhere in this document, the amendments do not significantly change the substance or frequency of the recordkeeping, disclosure, or reporting requirements. Thus, the amendments will not have a “significant economic impact on a substantial number of small entities.” 5 U.S.C. 605. The Commission has concluded, therefore, that a regulatory flexibility analysis is not necessary, and certifies, under Section 605 of the Regulatory Flexibility Act (5 U.S.C. 605(b)), that the amendments announced today will not have a significant economic impact on a substantial number of small entities.

List of Subjects in 16 CFR Part 305

• Advertising
• Energy conservation
• Household appliances
• Labeling
• Reporting and recordkeeping requirements

For the reasons set out above, the Commission amends 16 CFR part 305 as follows:

PART 305—ENERGY AND WATER USE LABELING FOR CONSUMER PRODUCTS UNDER THE ENERGY POLICY AND CONSERVATION ACT (ENERGY LABELING RULE)

1. The authority citation for Part 305 continues to read as follows:

Authority: 42 U.S.C. 6294.

2. In § 305.7, amend paragraphs (a) and (b) to read as follows:

3. Amend § 305.12, to revise paragraph (f) to read as follows, remove paragraphs (g) and (h), redesignate paragraph (i) as paragraph (g), and revise newly redesignated paragraph (g) to read as follows:

4. Revise Appendices G1, G2, G3, G4, G5, G6, G7, and G8 to part 305 to read as follows:

Appendix G1 to Part 305—Furnaces—Gas

Appendix G2 to Part 305—Furnaces—Electric

Appendix G3 to Part 305—Furnaces—Oil

Appendix G4 to Part 305—Mobile Home Furnaces—Gas

Appendix G5 to Part 305—Mobile Home Furnaces—Oil

Appendix G6 to Part 305—Boilers (Gas)

Appendix G7 to Part 305—Boilers (Oil)

Appendix G8 to Part 305—Boilers (Electric)

5. Appendix L to part 305 is amended as follows:

a. Prototype Labels 1, 2, 3, and 4 are revised;

b. Sample Labels 7, 7A, 8, 9, 9A, and 9B are revised;

c. Sample Labels 7B and 8A are removed; and

d. Sample Label 17 is added.

The revisions read as follows:

Appendix L to Part 305—Sample Labels