Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations 78057 

1 42 U.S.C. 6294. 

2More information about the Rule can be found 

at http://www.ftc.gov/appliances. 

3 44 FR 66466 (Nov. 19, 1979). 

4See 52 FR 46888 (Dec. 10, 1987) (central air 

conditioners); 59 FR 49556 (Sept. 28, 1994) (pool 

heaters); 54 FR 28031 (July 5, 1989) (fluorescent 

lamp ballasts); 58 FR 54955 (Oct. 25, 1993) (certain 

plumbing products); and 59 FR 25176 (May 13, 

1994) (lighting products). 

5Section 137 of EPACT 2005 (Pub. L. 109–58 

(2005)). 

6EPACT 2005 (42 U.S.C. 6295(ff)) further directs 

DOE to require that all ceiling fans manufactured 

after January 1, 2007 have fan speed controls 

separate from any lighting controls, adjustable 

speed controls (either more than one speed or 

variable speed), and reversible fan action capability 

(except for some exempted categories). 

7EPACT 2005 did not amend the list of covered 

products in EPCA section 322 (42 U.S.C. 6292) to 

include the new products added by the legislation 

such as ceiling fans, exit signs, and torchieres. 

Nevertheless, language elsewhere in EPACT 2005 

(e.g., section 137(b)) makes it clear that Congress 

intended to treat these items as covered products. 

Accordingly, the Commission believes that ceiling 

fans are subject to EPCA requirements for covered 

products, such as energy range disclosures on labels 

required by section 324(c) and the reporting 

requirements of section 326(b). 

[FR Doc. E6–21954 Filed 12–27–06; 8:45 am] 

BILLING CODE 4910–13–P 

FEDERAL TRADE COMMISSION 

16 CFR Part 305 

RIN 3084–AA74 

Appliance Labeling Rule 

AGENCY: Federal Trade Commission 

(‘‘FTC’’ or ‘‘Commission’’). 

ACTION: Final rule. 

SUMMARY: The Energy Policy Act of 2005 

directs the Commission to issue labeling 

requirements for the electricity used by 

ceiling fans to circulate air. The 

Commission is publishing amendments 

to the Appliance Labeling Rule that 

establish energy labeling requirements 

for these products. 

DATES: The amendments published in 

this final rule will become effective on 

January 1, 2009. 

ADDRESSES: Requests for copies of this 

document are available from: Public 

Reference Branch, Room 130, Federal 

Trade Commission, 600 Pennsylvania 

Avenue, NW., Washington, DC 20580. 

The complete record of this proceeding 

is also available at that address. 

Relevant portions of the proceeding, 

including this document, are available 

at http://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 

Section 324 of the Energy Policy and 

Conservation Act of 1975 (‘‘EPCA’’) (42 

U.S.C. 6291–6309), as amended, 

requires the FTC to prescribe labeling 

rules for the disclosure of estimated 

annual energy cost, or alternative energy 

consumption information, for a variety 

of products covered by the statute, 

including home appliance, lighting, and 

plumbing products.1 The Commission’s 

Appliance Labeling Rule (‘‘the Rule’’) 

(16 CFR part 305) implements the 

requirements of EPCA by directing 

manufacturers to disclose energy 

information about major household 

appliances. This information enables 

consumers to compare the energy use or 

efficiency of competing models.2 When 

initially published in 1979,3 the Rule 

applied to eight appliance 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, fluorescent 

lamp ballasts, plumbing products, 

lighting products, pool heaters, and 

some other types of water heaters.4

Congress enacted the Energy Policy 

Act of 2005 (‘‘EPACT 2005’’) directing 

the Commission to require energy 

labeling for ceiling fans.5 Pursuant to 

this directive, on June 21, 2006, the 

Commission published a notice of 

proposed rulemaking (‘‘NPRM’’) seeking 

public comment on proposed fan 

labeling requirements (71 FR 35584). 

Before discussing the comments 

received in response to the NPRM and 

the Commission’s final requirements for 

ceiling fan labeling, this Notice 

describes the provisions of EPACT 2005, 

ceiling fan uses, ENERGY STAR 

specifications, and existing state 

labeling programs. 

A. Energy Policy Act of 2005 

Section 137 of EPACT 2005 (Pub. L. 

No. 109–58 (2005)) amends EPCA to 

include new requirements related to 

ceiling fans. Section 324(a)(2)(G)(i) of 

EPCA (42 U.S.C. 6294(a)(2)(G)(i)) 

requires the Commission to ‘‘issue, by 

rule, in accordance with this section, 

labeling requirements for the electricity 

used by ceiling fans to circulate air in 

a room.’’ The statute also directs the 

Department of Energy (‘‘DOE’’) to 

prescribe test procedures and energy 

conservation standards for ceiling fans.6

(See 42 U.S.C. 6293(b)(16) and 42 U.S.C. 

6295(v)). According to EPACT 2005, the 

test procedure for ceiling fans must be 

based on the ‘‘ENERGY STAR Testing 

Facility Guidance Manual: Building a 

Testing Facility and Performing the 

Solid State Test Method for ENERGY 

STAR Qualified Ceiling Fans, Version 

1.1’’ (‘‘ENERGY STAR Guidance 

Manual’’) published by the 

Environmental Protection Agency 

(EPA). (42 U.S.C. 6293(b)(16)). However, 

in issuing testing and conservation 

standards, DOE may exempt or set 

different standards for certain product 

classes if the primary standards are not 

technically feasible or economically 

justified. DOE may also establish 

separate or exempted product classes for 

highly decorative fans for which air 

movement performance is a secondary 

design feature. (42 U.S.C. 6295(v)). DOE 

published a final test procedure for 

ceiling fans on December 8, 2006 (71 FR 

71430) based on the ENERGY STAR 

Guidance Manual. 

In developing labeling rules for 

products covered by EPCA (such as 

ceiling fans), the Commission must 

follow the requirements set out in 

section 324(c) (42 U.S.C. 6294(c)).7

Under section 324(c), labels must 

disclose the estimated annual operating 

cost determined in accordance with 

DOE test procedures unless otherwise 

indicated in the law. The Commission, 

however, may require a different 

measure of energy consumption if DOE 

determines that the cost disclosure is 

not technologically feasible or the 

Commission determines such a 

disclosure is not likely to assist 

consumers in making purchasing 

decisions or is not economically 

feasible. (42 U.S.C. 6294(c)(1)(A)). In 

addition, labels must disclose 

information about the range of operating 

costs (or a different measure of energy 

consumption if required by the 

Commission). (42 U.S.C. 6294(c)(1)(B)). 

The Commission’s labeling rules also 

must include a description of the 

applicable type or class of covered 

product, information about the range of 

operating costs (or energy use), a 

description of applicable test 

procedures, a prototype label, and 

directions for displaying the label. (42 

U.S.C. 6294(c)(2)). 

Additionally, EPCA authorizes the 

Commission to require the disclosure of 

energy information found on the label in 

any printed material displayed or 

distributed at the point of sale. (42 

U.S.C. 6293(c)(4)). The Commission also 

may direct manufacturers to provide 

additional energy-related disclosures on 

the label (or information shipped with 

the product), including instructions for 

the maintenance, use, or repair of the 


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78058 Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations 

8See Energy Information Administration, Office 

of Energy Markets and End Use, 2001 Residential 

Energy Consumption Survey, http:// 

www.eia.doe.gov/emeu/recs/ceilingfans/ 

ceiling_fan.html. 

9See http://www.eere.energy.gov/consumer/ 

your_home/space_heating_cooling/index.cfm/ 

mytopic=12355. 

10See http://www.energystar.gov/ 

index.cfm?c=ceiling_fans.pr_ceiling_fans_usage. 

11Airflow is the rate of air movement at a specific 

fan setting expressed in cubic feet per minute 

(‘‘CFM’’). Airflow efficiency is the ratio of airflow 

divided by power consumed by the motor and 

controls at a specific ceiling fan setting expressed 

in CFM per watt (‘‘CFM/Watt’’). 

12ENERGY STAR Testing Facility Guidance 

Manual, Version 1.1 (Dec. 9, 2002). 

13American Lighting Association (‘‘ALA’’) (09/ 

08/2006) #523596–00003; People’s Republic of 

China (‘‘PRC’’) (09/08/2006) #523596–00001; 

Hunter Fan Company (‘‘Hunter Fan’’) (09/11/2006) 

#523596–00002; and The Home Depot (10/23/06) 

(late-filed) #523596–00005. 

covered product. (42 U.S.C. 6293(c)(5)). 

Finally, section 326(b) of EPCA contains 

certain reporting requirements for 

covered products. (42 U.S.C. 6296). 

B. Ceiling Fan Uses 

According to DOE, 69.6 million U.S. 

households (or 65.1%) had ceiling fans 

in 2001.8 Ceiling fans can improve the 

comfort of a home by circulating air to 

create a draft throughout a room. For 

homes using air conditioning, a ceiling 

fan allows consumers to raise the 

thermostat setting about 4°F with no 

reduction in comfort. In temperate 

climates, or during moderately hot 

weather, ceiling fans may allow 

consumers to avoid using air 

conditioning altogether. A larger fan 

blade provides comparable cooling at a 

lower velocity than a smaller blade. 

DOE recommends a 36- or 44-inch 

diameter fan to cool a room of up to 225 

square feet, while fans that are 52 inches 

or more should be used in larger 

rooms.9 In the winter, by reversing the 

blade direction and operating at low 

speed, ceiling fans can provide a gentle 

updraft, which forces warm air near the 

ceiling down into the occupied space.10

C. ENERGY STAR Specifications 

As mentioned above, the statute 

requires manufacturers to derive the 

energy information on ceiling fan labels 

from DOE tests, which must be based on 

the ENERGY STAR Guidance Manual. 

The ENERGY STAR program, 

administered by EPA and DOE, is a 

voluntary government labeling program 

that identifies high efficiency products. 

Ceiling fans that move air at least 20% 

more efficiently, on average, than 

standard models qualify for the 

ENERGY STAR label. The program also 

has minimum airflow and airflow 

efficiency requirements for qualifying 

models.11

ENERGY STAR requires participating 

manufacturers to conduct tests and selfcertify those product models that meet 

the ENERGY STAR guidelines. 

Manufacturers must derive airflow and 

airflow efficiency measurements using 

the Solid State Test Method as defined 

in the ENERGY STAR Guidance 

Manual.12 Under this method, testing 

personnel place the fan above a large 

diameter tube in a standard temperature 

and humidity-controlled room. The air 

delivered by the fan passes through the 

tunnel where velocity sensors mounted 

on a rotating arm measure the airflow at 

various points. ENERGY STAR directs 

manufacturers to measure efficiency at 

each of three fan speeds (low, medium, 

and high). For example, to meet 

ENERGY STAR standards, at low speed, 

fans must have a minimum airflow of 

1,250 CFM and an efficiency of 155 

CFM/Watt and, at high speed, fans must 

have a minimum airflow of 5,000 CFM 

and an efficiency of 75 CFM/Watt. 

ENERGY STAR also requires 

manufacturers to label the packages of 

qualifying products with airflow, fan 

power, consumption, and airflow 

efficiency at three operating speeds. 

D. California Energy Commission 

In addition to the ENERGY STAR 

specifications and test method, the State 

of California has requirements for 

ceiling fans. Under the California 

regulations, each ceiling fan package 

must display, in characters no less than 

1/4 inch high, the unit’s airflow (in 

CFM) and airflow efficiency (in CFM/ 

Watt) at low, medium, and high speeds. 

The requirements only apply to fans 

with diameters of 50 inches or greater. 

(Cal. Code Regs. tit. 20, § 1607(d)(7)). 

California regulations do not specify the 

necessary test procedures. 

II. Summary of Final Rule 

Requirements 

Consistent with the Commission’s 

June 21, 2006 NPRM, the Final Rule 

requires ceiling fan manufacturers to 

label their product packages with: (1) 

The fan’s airflow at high speed in CFM; 

(2) the fan’s power consumption in 

watts at high speed; (3) the fan’s airflow 

efficiency in CFM/Watt at high speed; 

and (4) a range of airflow efficiencies at 

high speed for standard-sized fans on 

the market as published by the 

Commission. To obtain this information, 

manufacturers will have to test their 

fans pursuant the procedures required 

by DOE Appendix U to Subpart B of 10 

CFR part 430. The Final Rule requires 

manufacturers to provide this 

information on a label affixed to the 

product packaging as well as in paper 

and online catalogs. The Rule also 

requires manufacturers to submit 

reports to the Commission with high 

speed airflow, power consumption, and 

airflow efficiency information for the 

applicable models pursuant to EPCA’s 

reporting requirements. (42 U.S.C. 

6296). By statute, the Rule does not 

apply to fans produced before January 1, 

2009. 

III. Final Rule Issues and Comments 

Received on Proposed Rule 

The Commission received four 

comments in response to its June 21, 

2006 NPRM.13 Generally, the comments 

supported the FTC’s proposed 

requirements. The Commission has 

made a few minor changes to the 

proposed rule based on comments and 

additional information. In general, 

however, the Final Rule is substantially 

similar to that proposed in the NPRM. 

The following sections describe the 

changes made to the proposed rule, 

concerns raised by the comments, and 

other issues related to the final 

requirements. 

A. Changes to Proposed Rule 

The Commission has made six minor 

changes to the proposed language. First, 

we added a sentence to the reporting 

requirements in § 305.8(a)(1) to clarify 

that efficiency ratings, electricity 

consumption, and capacity for ceiling 

fans must be provided at high speed and 

that manufacturers must report fan size 

(measured by diameter in inches). 

Second, we have added a sentence to 

the description of the term ‘‘ceiling fan’’

in section 305.5 to clarify that the Rule 

does not apply to products for which 

DOE has no test procedure. Third, we 

included efficiency range information in 

§ 305.11(g)(1)(E)&(F). Fourth, in 

response to comments, we clarified 

§ 305.11(g)(2) to indicate that the label’s 

text shall be black with a white 

background and clarified that the term 

‘‘placement’’ refers to placement of text 

within the label. Fifth, § 305.11(g) in the 

Final Rule indicates that the label’s text 

size and content, and the order of the 

required disclosures shall be consistent 

with Ceiling Fan Label Illustration of 

Appendix L of Part 305. Sixth, we have 

changed the language in the catalog 

requirement in § 305.14 to clarify that 

the required information must be 

disclosed clearly and conspicuously. 

B. Test Procedures 

Under EPCA (42 U.S.C. 6294(c)), 

manufacturers must determine the 

energy performance of their products 

pursuant to standard DOE test 


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14 In its comments, the PRC suggested that the 

required test method should be international 

standard IEC 60879–1986 and raised additional 

questions about the test procedure. EPCA charges 

DOE with the responsibility for setting test 

procedures. In the case of ceiling fans, Congress has 

mandated that DOE base its test on the existing 

ENERGY STAR procedure. 

15Because airflow efficiency is the ratio of airflow 

(i.e., fan strength) to power consumption, a less 

efficient model may deliver less air but, at the same 

time, use less electricity and thus cost less to 

operate. For example, a model with an efficiency 

rating of 100 CFM/Watt, 6,000 CFM airflow, and 60 

watts power consumption will use more electricity 

and thus cost more to operate than a fan with a 

lower efficiency rating of 91 CFM/Watt, 5,000 CFM 

airflow, and power consumption of 55 watts. 

16We have added a sentence to the reporting 

requirements in § 305.8(a)(1) to clarify that 

efficiency ratings, electricity consumption, and 

capacity for ceiling fans must be provided at high 

speed. 

17This is intended to help consumers understand 

that fans provide no cooling benefit in an 

unoccupied room. 

procedures.14 As mentioned earlier in 

this Notice, DOE published final test 

procedures for ceiling fans on December 

8, 2006. (71 FR 71340). EPACT 2005 

directs the Commission to issue a 

labeling rule within 18 months after the 

Act’s passage and also indicates that 

such labeling rules cannot be applied to 

products manufactured before January 

1, 2009. (42 U.S.C. 6294(a)(2)(G)). 

Accordingly, in compliance with 

EPACT 2005, the Commission is issuing 

the Rule now with an effective date of 

January 1, 2009. 

C. Operating Costs 

Section 324(c) of EPCA (42 U.S.C. 

6294(c)) requires that labels for covered 

products contain operating-cost 

information unless the Commission 

determines that such a disclosure is not 

likely to assist consumers in making 

purchasing decisions or is not 

economically feasible. As discussed in 

the NPRM, the Commission believes 

that annual operating costs are not 

likely to assist consumers because 

ceiling fan use is likely to vary 

significantly depending on factors such 

as climate, household heating and 

cooling systems, and individual use. We 

also note that the DOE test procedure 

does not contain sufficient information 

to allow manufacturers to calculate 

annual operating costs. No comments 

raised objections to the Commission’s 

proposal in this regard. Accordingly, the 

Final Rule does not require operating 

costs on ceiling fans. 

D. Content of Label 

In the NPRM, the Commission 

proposed using three descriptors, each 

of which provides different information 

about the fan. Electricity use (in watts) 

provides information about the power 

drawn by the fan and allows consumers 

to compare the fan’s energy use to other 

household items such as light bulbs. 

Electricity use information also provides 

an idea of how much the fan will cost 

to operate because the higher the 

wattage, the higher the operating costs. 

Electricity use does not, however, 

provide information about the amount 

of air the fan can move. For example, a 

fan that uses very little electricity may 

not create air movement adequate for a 

consumer’s needs. 

The Commission’ NPRM, therefore, 

also proposed requiring that each label 

contain airflow and airflow efficiency 

information. The airflow rating 

describes the fan’s capacity, that is, the 

amount of air the fan will move in 

CFM—the greater the CFM, the more air 

the model will move. The airflow 

efficiency, expressed in CFM/Watt 

indicates the amount of air the product 

will move for each watt of electricity 

used. This efficiency information 

describes the relationship between the 

product’s energy use and its output, not 

necessarily the electricity used by the 

product. In its comments, Hunter Fan 

agreed that the three proposed 

descriptors are required to provide 

‘‘consumers with the necessary 

information to make an informed 

purchase.’’ It noted that CFM 

information is necessary because it 

provides consumers with information 

about whether a particular model will 

move sufficient air for large rooms. No 

comments opposed these disclosures. 

Based on the comments and the 

reasoning detailed above, the 

Commission continues to believe that 

all three disclosures should be included 

on the label. As discussed in the NPRM, 

the use of a single descriptor does not 

appear to be adequate because each 

single descriptor fails, by itself, to 

convey sufficient information to explain 

fully the product’s energy performance. 

As discussed above, electricity use does 

not provide information about fan 

output. Similarly, the efficiency rating is 

not necessarily an accurate predictor of 

the fan’s electricity consumption or its 

operating cost. Where there is 

significant variation in the airflow of 

competing models, the label should not 

suggest that high efficiency necessarily 

equates with cost savings.15

Accordingly, the Commission is 

requiring the inclusion of all three 

pieces of information on the label. 

The Final Rule also limits the 

disclosures to high-speed settings in 

order to simplify the information on the 

label.16 The Commission expects that 

the information at high speed will be 

adequate to allow consumers to 

compare the efficiency rating and power 

consumed by competing models. The 

inclusion of information for other speed 

settings would clutter the label with few 

additional benefits. In its comments, 

Hunter Fan Company indicated that 

‘‘showing total wattage used on high 

speed is a good general comparison tool 

for consumers to understand the 

electricity used relative to other devices 

in the home.’’ It also observed ‘‘that as 

long as the ceiling fan has a high CFM/ 

Watt rating, then the fan will be more 

efficient on whichever speed is used.’’

The ALA explained that high speed is 

‘‘the true unregulated performance of 

the fan’’ and that capacitors, inserted by 

manufacturers to control medium and 

low speeds, are set at values determined 

by each individual manufacturer. In 

addition, as proposed in the NPRM, the 

label must contain a money-saving tip 

reminding consumers to turn off their 

fans when they leave a room.17 No 

comments opposed the content of the 

proposed label disclosures. 

E. Additional Performance Information 

(Including ENERGY STAR Information) 

Under the Final Rule, manufacturers 

have the discretion to provide 

additional energy information elsewhere 

on the package or in marketing 

information. This information could 

include airflow efficiencies, power 

consumption in watts, and airflow at 

other speeds as long as such information 

is adequately substantiated and fairly 

represents the results of the applicable 

test procedure. To ensure that all fan 

packages feature a uniform energy label, 

however, the Rule limits the 

information allowed on the required 

label. A uniform label on every ceiling 

fan package should make it easier for 

consumers to locate and compare 

information for different models as they 

shop. 

Both Hunter Fan and ALA supported 

the proposal to require a consistent, 

uniform label. ALA, however, noted that 

ENERGY STAR-qualified fans are 

currently marked with an energy 

performance label required by the 

ENERGY STAR program. ALA urged 

that manufacturers be able to use the 

ENERGY STAR label on qualified 

products, in lieu of the FTC label. An 

exception for such a large portion of the 

market, however, would dilute the 

benefits of a uniform label. It may also 

imply to some consumers that fans 

bearing the FTC label are lower in 

efficiency, which may not be the case 

given the voluntary nature of the 

ENERGY STAR program. In addition, 

the absence of the FTC-required label on 


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18The proposed rule indicated that the sample 

illustration in the Appendix provided ‘‘suggested’’

font sizes. The language in the Final Rule provides 

more definitive instructions for preparing the label 

and should help ensure that the label is consistent 

in appearance from product to product. 

19We note that the statute authorizes DOE to 

issue exemptions for certain product classes if the 

primary standards are not technically feasible or 

economically justified and to establish separate or 

exempted product classes for highly decorative fans 

for which air movement performance is a secondary 

design feature. (42 U.S.C. 6295(v)). 

ENERGY STAR fans could create 

general confusion because some models 

would have the FTC label and others 

would not. Accordingly, the Final Rule 

does not exempt ENERGY STAR 

models. Manufacturers who choose to 

participate in ENERGY STAR can 

continue to provide the ENERGY STAR 

performance data elsewhere on the 

product package in accord with the 

ENERGY STAR guidelines. 

F. Efficiency Ranges 

In its NPRM, the Commission sought 

comment on the range of efficiency 

numbers that should be used in the 

statement proposed on the label (e.g., 

‘‘Compare: 49’’ to 60’’ ceiling fans have 

airflow efficiencies ranging from 

approximately ltol cubic feet per 

minute per watt at high speed.’’). The 

Commission proposed to include two 

separate ranges in the Rule, one for fans 

with blade sizes between 36’’ to 48’’ and 

another for 49’’ to 60.’’ Unfortunately, 

the comments did not provide data that 

could be used to develop such ranges. 

The Commission staff, therefore, has 

reviewed data from several sources, 

including online information from the 

California Energy Commission (http:// 

www.energy.ca.gov/appliances/ 

appliance/index.html), EPA’s 

ENERGYSTAR program (http:// 

www.energystar.gov/index.

cfm?c=ceiling_fans.pr_ceiling_fans), and 

various manufacturer and retail 

websites. Based on this data, the 

Commission is publishing the following 

ranges for placement on the label: 71 to 

86 CFM/Watt at high speed for fans with 

blade sizes between 36’’ to 48’’ and 51 

to 176 CFM/Watt at high speed for fans 

with blade sizes between 49’’ to 60’’

ceiling fans. (See §§ 305.11(g)(1)(E)&(F)). 

The Commission will revisit these 

ranges if data submissions in the future 

indicate that the required ranges are 

substantially different than the ranges of 

efficiency used by fans in the 

marketplace. 

In its comments, the PRC suggested 

that the energy efficiency range should 

be dynamic and published periodically. 

As stated in the NPRM, the Commission 

did not propose a detailed system of 

range information because it is unclear 

whether such information would 

provide consumer benefits 

commensurate with the costs associated 

with the necessary label changes. The 

Commission has not reviewed evidence 

that would change this view. As 

discussed above, however, the 

Commission will consider changes in 

the future if the actual efficiency ranges 

of products in the market place diverge 

substantially from the published ranges. 

G. Location of Label 

Under the Final Rule, manufacturers 

must place the ceiling fan label on 

product packages rather than on the 

products themselves. This requirement 

should assist consumers shopping in 

retail stores. Both Hunter Fan and ALA 

agreed. Hunter Fan explained that 

consumers would have a difficult time 

reading labels affixed to the products 

themselves because floor models are 

typically positioned in the store eight to 

nine feet off the floor. The PRC 

suggested that the money-saving tip on 

the label be placed on the ceiling fan’s 

switch box. This suggestion raises cost, 

feasibility, and consistency questions 

that have not been explored in this 

proceeding. Accordingly, we are not 

requiring such marking in the Final 

Rule. We note, however, that nothing 

prohibits manufacturers from marking 

their products with this information 

voluntarily. 

H. Size and Format Requirements 

The NPRM proposed certain size and 

format requirements for the label. As 

with the proposed rule, the Final Rule 

requires that the label must be at least 

four inches wide and three inches high. 

Under the Final Rule, the text font shall 

be Arial or another equivalent font, and 

the label’s text size and content, and the 

order of the required disclosures shall 

be consistent with Ceiling Fan Label 

Illustration of Appendix L of Part 305.18

The proposed rule did not specify the 

background color for the label. ALA 

suggested that, ‘‘for labels integrated 

into the carton’s printing plate, the 

nomenclature shall be black on a 

contrasting background.’’ While we 

understand manufacturers’ desire to 

incorporate background package colors 

on the label, we believe that this may 

detract from providing a consistent, 

recognizable label across all competing 

models to facilitate comparison 

shopping. Therefore, we have clarified 

the Final Rule language to indicate that 

label must be in black text with a white 

background. 

I. Request for Exemptions 

ALA suggested that the Commission 

grant an exemption for high speed axial 

ceiling fans with contoured blades and 

ceiling fans with multiple fan 

assemblies because the current ENERGY 

STAR test procedure (which serves as 

the basis for DOE’s procedure) is not a 

suitable test for these types of products. 

Similarly, the PRC urged the 

Commission to exempt highly 

decorative fans for which air movement 

is the secondary design feature. 

EPACT 2005 provides a definition of 

‘‘ceiling fan’’ and directs the 

Commission to issue a labeling rule for 

products fitting that definition. The 

statute defines ‘‘ceiling fan’’ as ‘‘a 

nonportable device that is suspended 

from a ceiling for circulating air via the 

rotation of fan blades.’’ (42 U.S.C. 

6291(49)). We have identified no basis 

for determining that the model types 

identified by commenters fall outside of 

this definition, and the law does not 

provide the Commission with explicit 

authority to make wholesale exemptions 

from the labeling requirement for 

different types or models of fans that 

otherwise fall within the statute’s 

definition. Accordingly, the basis for 

exempting these whole product 

categories from the labeling rule is at 

best unclear. 

At the same time, the FTC’s Rule 

requires that manufacturers test their 

products using the DOE-approved 

procedure. In some cases, that 

procedure may not be appropriate 

because it may not be possible to test 

certain fan types under the required test 

apparatus or required conditions. In 

other cases, the test may yield energy 

information that is not a valid source of 

comparison across fan types. Labeling in 

these circumstances could yield 

confusing or misleading results for 

consumers or could simply be 

impossible. Therefore, if DOE 

determines that its test procedure does 

not apply to certain types or models of 

ceiling fans, then the Commission will 

not expect manufacturers to label those 

products.19 The final definition of 

‘‘ceiling fan’’ indicates that the 

requirements of the rule are limited to 

those ceiling fans for which the 

Department of Energy has adopted and 

published test procedures for measuring 

energy usage. The Commission itself, 

however, is not issuing labeling 

exemptions for any ceiling fan types or 

models at this time. 

J. Catalog Disclosures 

Section 305.14 of the Rule currently 

requires that any manufacturer, 

distributor, retailer, or private labeler 

who advertises a covered product in a 

catalog, including a website, must 

provide the information required by 


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20We have also changed the language in the 

catalog requirement in § 305.14 to clarify that the 

required information must be disclosed clearly and 

conspicuously. 21 44 U.S.C. 3501–3520. 

22The Commission’s previous estimate of basic 

models as stated in the NPRM (1,500) has been 

modified to reflect ceiling fan data available from 

the California Energy Commission and the ENERGY 

STAR program. 

23The Commission’s previous estimate of two fan 

tests per model has been increased to three tests per 

model based on comments provided by ALA. 

section 305.11(g)(1) (i.e., airflow, 

electricity usage, airflow efficiency, and 

range information) on the website and 

in the catalogs. Because ceiling fans are 

covered products, the Final Rule 

amends these catalog requirements to 

include ceiling fans. Pursuant to the 

Final Rule, the required information 

should appear on each page that lists 

the covered product (see § 305.14(e)).20

K. Reporting Requirements 

Consistent with EPCA (42 U.S.C. 

6296), the NPRM contained certain 

reporting requirements for ceiling fans 

consistent with those applicable to other 

products covered by the Rule. For 

example, the statute requires 

manufacturers to submit annual reports 

to the FTC listing energy data for each 

model under current production (42 

U.S.C. 6296(b)(4)). 

Consistent with the proposed rule, the 

Final Rule will require manufacturers to 

submit: Information on the energy 

efficiency of ceiling fans, the model 

numbers for each basic model, the total 

energy consumed, the number of tests 

performed, and the capacity (i.e., cubic 

feet per minute). The Rule also requires 

the submission of an annual report for 

all models under production on March 

1st of each year (beginning in 2009). In 

addition, pursuant to section 305.8(c) of 

the Rule, manufacturers must submit 

data for new models prior to their 

distribution. The Final Rule contains an 

additional sentence in 305.8(a)(1) 

clarifying that manufacturers must 

report the diameter of models in inches 

and efficiency ratings, electricity 

consumption, and capacity at high 

speed. The diameter information (i.e., 

fan-blade size) will allow the FTC to 

group the fan data into the range of 

comparability categories established by 

the Rule (e.g., 49 to 60 inch fans). 

The PRC asked several questions 

related to the process for the submission 

of data to the FTC. The FTC staff 

provides guidance regarding the 

submission of data at http:// 

www.ftc.gov/bcp/conline/edcams/ 

eande/faq.htm. The FTC accepts data 

submissions in a variety of formats, 

including paper and email. Most 

manufacturers submit data via email 

using the spreadsheet files provided by 

the staff at the website. In addition, 

under the FTC’s Rule, it is not necessary 

to obtain third-party accreditation. 

L. Miscellaneous Issues 

ALA urged that the Commission 

exempt ceiling fans intended for export. 

We note that EPCA’s consumer labeling 

requirements (and thus the Rule’s 

requirements) do not apply to covered 

products manufactured for export and 

identified as such (see 42 U.S.C. 6300). 

ALA also mentioned that some models 

may have different motors because 

many manufacturers have multiple 

sources of supply for a given model. 

ALA asked whether the multiple 

sources of information should be 

disclosed to the consumer. Under the 

Rule, manufacturers must test and label 

each model following DOE standard test 

procedures. As a general matter, the 

energy performance of models sold on 

the market should be consistent with 

the results of the models tested. Section 

305.6 of the Commission’s Rule requires 

that any representation with respect to 

energy consumption measures derived 

from the DOE test must be based upon 

DOE’s sampling procedures set forth in 

10 CFR 430.24, subpart B. 

IV. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act (‘‘PRA’’), as amended, 44 

U.S.C. 3501, et seq., the Commission 

submitted the proposed Rule to the 

Office of Management and Budget 

(‘‘OMB’’) for review. OMB approved the 

Rule’s information collection 

requirements through August 31, 2009 

(OMB Control No. 3084–0069). Changes 

made to the Rule subsequent to 

publication of the NPRM have not 

affected the Commission’s previous 

burden estimate. Nonetheless, as 

discussed below, the Commission has 

revised its previous burden estimate 

based on data available from the 

California Energy Commission and the 

ENERGY STAR program, as well as, a 

comment received from ALA. As 

required by the PRA, the Commission 

has submitted its revised burden 

estimate to OMB for review. 

As set forth in the NPRM, the Rule 

contains disclosure and reporting 

requirements that constitute 

‘‘information collection requirements’’

as defined by 5 CFR 1320.7(c), the 

regulation that implements the 

Paperwork Reduction Act (‘‘PRA’’).21

Specifically, the Rule expands the scope 

of pre-existing recordkeeping, labeling, 

and reporting requirements to include 

manufacturers for a product not 

previously covered, ceiling fans. 

The Commission’s burden estimates 

are based on census data, Department of 

Energy figures and estimates, general 

knowledge of manufacturing practices, 

and trade association advice and figures. 

Because the burden of compliance falls 

almost entirely on manufacturers and 

importers (with a de minimis burden 

relating to retailers), the Commission 

has calculated the burden estimates 

based on the number of ceiling fan units 

shipped domestically. 

Annual Hours Burden 

The Commission estimates that there 

are 2,500 basic models (i.e., units with 

essentially identical functional physical 

and electrical characteristics) of ceiling 

fans sold in the U.S. 22 Consistent with 

reporting estimates for other products 

covered by the Rule, the Commission 

estimates that the average reporting 

burden for manufacturers will be 

approximately two minutes per basic 

model. Accordingly, the estimated 

annual reporting burden for ceiling fans 

is approximately 83 hours (2 minutes × 

2,500 models ÷ 60 minutes per hour). 

With regard to labeling burdens, 

manufacturers will require 

approximately four minutes to create a 

label for each basic model. Thus, the 

approximate annual drafting burden 

involved in labeling is 167 hours per 

year [2,500 basic models × four minutes 

(average drafting time per basic model) 

÷ 60 minutes per hour]. In addition, the 

Commission estimates that it will take, 

on average, six seconds to place labels 

on the packaging of each unit. Based on 

2004 U.S. census data, the Commission 

estimates that there are approximately 

6,000,000 ceiling fan units shipped each 

year in the U.S. Thus, the annual 

burden for affixing labels to ceiling fans 

is approximately 10,000 hours [six 

(seconds) × 6,000,000 (the total products 

shipped in 2004) divided by 3,600 

(seconds per hour)]. Accordingly, the 

total annual labeling burden would be 

approximately 10,167 hours. 

With regard to testing burdens, 

manufacturers will require 

approximately three hours to test each 

new basic model. The FTC estimates 

that, on average, 50% of the total basic 

models are tested each year. 

Accordingly, the estimated annual 

testing burden would be approximately 

3,750 hours [1 hour × 3 (average number 

of tests run per model) × 1,250 (50% of 

2,500 basic models)].23

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 Commission estimates that it will 

take ceiling fan manufacturers one 


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24This is a 2,000 hour increase from the 

Commission’s previous burden estimate as stated in 

the NPRM. 

25The ALA comment indicated that all 

recordkeeping, reporting, and fact sheet preparation 

will be conducted by engineering personnel at a 

rate of $40.59 per hour. The hourly rate of $40.59 

is based on data recently released by the U.S. 

Department of Labor’s Bureau of Labor Statistics. 

See http://www.bls.gov/ncs/ocs/sp/ncbl0757.pdf. 

Accordingly, the Commission has modified its 

previous assumption that such work would be 

conducted by skilled technical personnel at an 

hourly rate of $29.40. 

26 In response to the NPRM, ALA further 

commented that a cost estimate for testing from one 

of the three certified facilities is $1,785 per fan. The 

Commission assumes that labor costs make up only 

a portion of this estimate. Accordingly, the 

additional cost for testing proposed by ALA is 

addressed in the non-labor costs section of this 

document. 

27This estimate is comprised of an estimated 6 

million ceiling fan units shipped in the U.S. each 

year (based on 2004 U.S. census data) at an average 

cost of seven cents per label plus approximately 

$500 in nominal paper and postage costs. 

28At least one large ceiling fan manufacturer has 

its own testing facility. See http:// 

www.energystar.gov/ia/partners/manuf_res/ 

cflabs.pdf. 

29As discussed above, the Commission estimates 

manufacturers will require approximately three 

hours to test each new basic model. Assuming an 

electrical engineer performs the test at an hourly 

wage rate of $40.59, the Commission estimates that 

approximately $120 of the total testing cost 

incurred by ceiling fan manufacturers is 

appropriately categorized as a labor cost. 

minute per record (i.e., per model) to 

store the data. Accordingly, the 

estimated annual recordkeeping burden 

would be approximately 42 hours (1 

minute × 2,500 basic models ÷ 60 

minutes per hour). 

In addition, the Rule requires sellers 

offering ceiling fan products through 

retail sales catalogs (i.e., those 

publications from which a consumer 

can actually order merchandise) to 

disclose energy information for each fan 

model in the catalog. Because this 

information is supplied by the product 

manufacturers, the burden on the 

retailer consists of incorporating the 

information into the catalog 

presentation. 

Based upon staff research concerning 

the number of manufacturers and online 

retailers of ceiling fans, the Commission 

estimates that there are an additional 

200 catalog sellers of ceiling fans (paper 

catalogs and online sellers) who are 

subject to the Rule’s catalog disclosure 

requirements. The Commission 

estimates that these sellers each require 

approximately 17 hours per year to 

incorporate the data into their catalogs. 

This estimate is based on the 

assumption that entry of the required 

information takes on average one 

minute per covered product and an 

assumption that the average online 

catalog contains approximately 1,000 

covered products. 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 1,000 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 3,400 hours (200 sellers × 17 

hours annually). 

Thus, the Commission now estimates 

that the total annual burden due to the 

inclusion of ceiling fans under the scope 

of the Rule will be 17,000 hours (83 

hours for reporting + 167 hours for 

drafting labels + 10,000 hours for 

affixing labels + 3,750 hours for testing 

+ 42 hours for recordkeeping + 3,400 

disclosure hours for catalog sellers), 

rounded to the nearest thousand.24

Annual Labor Costs 

The Commission has derived labor 

costs by applying appropriate estimated 

hourly cost figures to the burden hours 

described above. In calculating the cost 

figures, the FTC assumes that test 

procedures, recordkeeping and 

reporting, marking, and preparation of 

fact sheets are conducted by electrical 

engineers at an hourly rate of $40.59.25

In addition, we assume labeling will be 

conducted by skilled clerical personnel 

at an hourly rate of $14.21. 

Based on the above estimates and 

assumptions, the total annual labor cost 

for the five different categories of 

burden under the Rule, applied to 

ceiling fans, is derived as follows: (1) 

annual testing labor cost is 

approximately $152,213 (3,750 hours × 

$40.59 (electrical engineer wage 

category)); and (2) annual labor costs for 

recordkeeping, reporting, and catalog 

disclosures are approximately $149,858 

(3,692 hours × $40.59 (electrical 

engineer wage category)); and (3) annual 

labor cost for labeling will be $142,100 

(10,000 hours × $14.21 (skilled clerical 

wage category)).26 Thus, the total annual 

labor cost is approximately $444,000 

rounded to the nearest thousand. 

Annual Non-labor Costs 

In its previous submission to OMB, 

Commission staff examined the five 

distinct burdens imposed by the 

proposed Rule—testing, reporting, 

recordkeeping, labeling, and retail 

catalog disclosures—as they affect nonlabor costs incurred by manufacturers 

and catalog sellers of ceiling fans. The 

manufacturers and retailers who make 

the required disclosures in catalogs 

already are producing catalogs in the 

ordinary course of business; 

accordingly, capital costs associated 

with such disclosures would be de 

minimis. Nonetheless, ceiling fan 

manufacturers that submit required 

reports to the Commission directly 

(rather than through trade associations) 

incur some nominal costs for paper and 

postage. Ceiling fan manufacturers must 

also incur the cost of procuring labels. 

The Commission retains staff’s previous 

estimate that ceiling fan manufacturers 

will incur approximately $420,500 for 

such costs.27 However, as discussed 

below, the Commission has decided to 

revise staff’s previous non-labor cost 

estimate to take into account additional 

costs associated with testing. 

The ALA comment indicated ceilingfan manufacturers will contract with 

third-party labs to test their products. 

According to ALA, manufacturers incur 

a testing cost of $1,785 per ceiling fan 

at such labs. The Commission believes 

this calculation overestimates the cost 

because it does not account for price 

adjustments based on high-volume 

testing orders, and it assumes that all 

manufacturers will use third-party 

labs.28 Therefore, the Commission 

estimates that manufacturers will incur 

testing costs of $1,000 per ceiling fan. 

The Commission further estimates that 

approximately $120 of that cost is 

attributed to labor.29 Accordingly, the 

Commission estimates that the average 

annual non-labor cost associated with 

testing will be $1,100,000 [($880 (nonlabor test cost per fan) × 1,250 (number 

of basic models tested per year)]. 

ALA’s comment also indicated that 

manufacturers must dispose of tested 

units. Assuming that, on average, 50% 

of the basic models are tested each year, 

the Commission estimates that the 

annual capital cost of disposal to be 

$750,000 ($200 disposal cost per fan × 

3 tests per fan × 1,250 basic models 

tested each year). ALA also indicated 

that manufacturers incur costs for 

shipping fans to third party test labs at 

an average of $9 per model. Although 

such costs are not incurred by 

manufacturers which do their own 

testing, the Commission conservatively 

estimates that the cost for shipping fans 

to third-party test labs will be $11,250 

($9 per fan × 1,250 models). 

Accordingly, the total annual nonlabor cost imposed by the Rule, as 

applied to ceiling fans, will be 

approximately $2,282,000, rounded to 


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the nearest thousand ($420,000 for 

procuring labels + $500 for nominal 

paper and postage costs + $1,100,000 for 

testing + $750,000 for disposal costs + 

$11,250 for shipping to third-party test 

labs). 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601–612, requires that 

the Commission provide an Initial 

Regulatory Flexibility Analysis 

(‘‘IRFA’’) with a proposed Rule and a 

Final Regulatory Flexibility Analysis 

(‘‘FRFA’’), if any, with the Final Rule, 

unless the Commission certifies that the 

Rule will not have a significant 

economic impact on a substantial 

number of small entities. See 5 U.S.C. 

603–605. 

The Commission believes it likely that 

the amendments will not have a 

significant economic impact on a 

substantial number of small entities. 

The Commission estimates that these 

requirements will apply to about 95 

ceiling-fan manufacturers and an 

additional 200 online and paper catalog 

sellers of ceiling fans. We expect that 

about two-thirds of these entities will 

qualify as small businesses under the 

relevant thresholds (i.e., 750 or fewer 

employees). As detailed in the previous 

section of this notice, the requirements 

will impose testing, recordkeeping, and 

labeling requirements on affected 

entities. The Commission expects that, 

in some cases, the Rule will have 

significant impact on individual small 

businesses, particularly those that 

manufacturer a large number of different 

fan models. The actual number of small 

businesses experiencing such impacts, 

however, is not likely to be substantial. 

Accordingly, this document serves as 

notice to the Small Business 

Administration of the FTC’s 

certification of no effect. Although the 

Commission certifies under the RFA 

that the Rule proposed in this notice 

would not, if promulgated, have a 

significant impact on a substantial 

number of small entities, the 

Commission has determined, 

nonetheless, that it is appropriate to 

publish an IRFA in order to inquire into 

the impact of the proposed Rule on 

small entities. Therefore, the 

Commission has prepared the following 

analysis: 

A. Need For and Objectives of the Rule 

The Federal Trade Commission is 

charged with enforcing the requirements 

of 42 U.S.C. 6294, which require the 

agency to issue this Rule. The objective 

of the proposed Rule is to establish 

energy labeling requirements for the 

movement of air by ceiling fans. Section 

137 of EPACT 2005 amends section 324 

of EPCA to require the Commission to 

‘‘issue, by rule, in accordance with this 

section, labeling requirements for the 

electricity used by ceiling fans to 

circulate air in a room.’’

B. Significant Issues Raised By Public 

Comment 

No significant issues were raised by 

public comment related to small 

business impacts. 

C. Small Entities To Which the Final 

Rule Will Apply 

Under the Small Business Size 

Standards issued by the Small Business 

Administration, household fan 

manufacturers qualify as small 

businesses if they have fewer than 750 

employees. The Commission estimates 

that fewer than 200 entities subject to 

the proposed Rule’s requirements 

qualify as small businesses. 

D. Projected Reporting, Recordkeeping, 

and Other Compliance Requirements 

The Commission recognizes that the 

labeling rule will involve some 

increased costs for affected parties. Most 

of these costs will be in the form of 

product testing and drafting costs for the 

label. These costs are detailed in the 

Paperwork Reduction Act section of this 

notice. The entities affected will include 

ceiling fan manufacturers and catalog 

retailers (including online sellers). The 

Commission does not expect that there 

will be any significant legal, 

professional, or training costs to comply 

with the Rule. The Commission does 

not expect that the labeling 

requirements will impose significant 

incremental costs for Web sites or other 

advertising. 

E. Alternatives Considered 

The provisions of the Rule directly 

reflect the requirements of the statute, 

and thus leave little room for significant 

alternatives to decrease the burden on 

regulated entities. One commenter, 

ALA, urged the Commission to accept 

data from models already tested under 

the ENERGY STAR program without 

requiring additional 95% confidence 

level testing as generally required by 

DOE. Under the enabling statute, the 

energy information disclosed on the 

label must be based on the test 

procedures in DOE’s regulations. If DOE 

determines that such additional testing 

is not required or necessary for ENERGY 

STAR ceiling fans, the Commission will 

defer to DOE. 

VI. Final Rule Language 

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—[AMENDED] 

■ 1. The authority citation for part 305 

continues to read as follows: 

Authority: 42 U.S.C. 6294. 

■ 2. Amend § 305.2 by revising 

paragraph (i), revising paragraph (o)(21), 

and adding paragraph (o)(22) to read as 

follows: 

§ 305.2 Definitions. 

* * * * * 

(i) Energy efficiency rating means the 

following product-specific energy usage 

descriptors: annual fuel utilization 

efficiency (AFUE) for furnaces; energy 

efficiency ratio (EER) for room air 

conditioners; seasonal energy efficiency 

ratio (SEER) for the cooling function of 

central air conditioners and heat pumps; 

heating seasonal performance factor 

(HSPF) for the heating function of heat 

pumps; airflow efficiency for ceiling 

fans; and, thermal efficiency (TE) for 

pool heaters, as these descriptors are 

determined in accordance with tests 

prescribed under section 323 of the Act 

(42 U.S.C. 6293). These product-specific 

energy usage descriptors shall be used 

in satisfying all the requirements of this 

part. 

* * * * * 

(o) * * * 

(21) Ceiling fans. 

(22) Any other type of consumer 

product which the Department of 

Energy classifies as a covered product 

under section 322(b) of the Act (42 

U.S.C. 6292). 

* * * * * 

■ 3. Amend § 305.3 by adding paragraph 

(s) to read as follows: 

§ 305.3 Description of covered products. 

* * * * * 

(s) Ceiling fan means a nonportable 

device that is suspended from a ceiling 

for circulating air via the rotation of fan 

blades. The requirements of this part are 

limited to those ceiling fans for which 

the Department of Energy has adopted 

and published test procedures for 

measuring energy usage. 

■ 4. Add § 305.5(a)(11) to read as 

follows: 


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§ 305.5 Determinations of estimated 

annual energy consumption, estimated 

annual operating cost, and energy 

efficiency rating, and of water use rate. 

(a) * * * 

(11) Ceiling Fans—§ 430.23. 

* * * * * 

■ 5. Add § 305.7(l) to read as follows: 

§ 305.7 Determinations of capacity. 

* * * * * 

(l) Ceiling fans. The capacity shall be 

the airflow in cubic feet per minute as 

determined according to appendix U of 

10 CFR part 430, subpart B. 

■ 6. Amend § 305.8 to revise paragraphs 

(a)(1) and (b)(1) to read as follows: 

§ 305.8 Submission of data. 

(a)(1) Each manufacturer of a covered 

product (except manufacturers of 

fluorescent lamp ballasts, showerheads, 

faucets, water closets, urinals, general 

service fluorescent lamps, medium base 

compact fluorescent lamps, or general 

service incandescent lamps including 

incandescent reflector lamps) shall 

submit annually to the Commission a 

report listing the estimated annual 

energy consumption (for refrigerators, 

refrigerator-freezers, freezers, clothes 

washers, dishwashers and water 

heaters) or the energy efficiency rating 

(for room air conditioners, central air 

conditioners, heat pumps, furnaces, 

ceiling fans, and pool heaters) for each 

basic model in current production, 

determined according to § 305.5 and 

statistically verified according to 

§ 305.6. The report must also list, for 

each basic model in current production: 

the model numbers for each basic 

model; the total energy consumption, 

determined in accordance with § 305.5, 

used to calculate the estimated annual 

energy consumption or energy 

efficiency rating; the number of tests 

performed; and, its capacity, determined 

in accordance with § 305.7. For those 

models that use more than one energy 

source or more than one cycle, each 

separate amount of energy consumption 

or energy cost, measured in accordance 

with § 305.5, shall be listed in the 

report. Appendix K illustrates a 

suggested reporting format. Starting 

serial numbers or other numbers 

identifying the date of manufacture of 

covered products shall be submitted 

whenever a new basic model is 

introduced on the market. For ceiling 

fans, the report shall contain the fan 

diameter in inches and also shall 

contain efficiency ratings, energy 

consumption, and capacity at high 

speed. 

* * * * * 

(b)(1) All data required by § 305.8(a) 

except serial numbers shall be 

submitted to the Commission annually, 

on or before the following dates: 

Product category Deadline for data 

submission 

Refrigerators ................................................................................................................................................................................. Aug. 1. 

Refrigerator-freezers .................................................................................................................................................................... Aug. 1. 

Freezers ....................................................................................................................................................................................... Aug. 1. 

Central air conditioners ................................................................................................................................................................ July 1. 

Heat pumps .................................................................................................................................................................................. July 1. 

Dishwashers ................................................................................................................................................................................. June 1. 

Water heaters ............................................................................................................................................................................... May 1. 

Room air conditioners .................................................................................................................................................................. May 1. 

Furnaces ...................................................................................................................................................................................... May 1. 

Pool heaters ................................................................................................................................................................................. May 1. 

Clothes washers ........................................................................................................................................................................... Oct. 1. 

Fluorescent lamp ballasts ............................................................................................................................................................ Mar. 1. 

Showerheads ............................................................................................................................................................................... Mar. 1. 

Faucets ......................................................................................................................................................................................... Mar. 1. 

Water closets ............................................................................................................................................................................... Mar. 1. 

Urinals .......................................................................................................................................................................................... Mar. 1. 

Ceiling fans .................................................................................................................................................................................. Mar. 1. 

Fluorescent lamps ........................................................................................................................................................................ Mar. 1 [Stayed]. 

Medium Base Compact Fluorescent Lamps ................................................................................................................................ Mar. 1 [Stayed]. 

Incandescent Lamps, incl. Reflector Lamps ................................................................................................................................ Mar. 1 [Stayed]. 

* * * * * 

■ 7. Revise § 305.10(a) to read as 

follows: 

§ 305.10 Ranges of estimated annual 

energy consumption and energy efficiency 

ratings. 

(a) The range of estimated annual 

energy consumption or energy 

efficiency ratings for each covered 

product (except fluorescent lamp 

ballasts, showerheads, faucets, water 

closets, urinals, or ceiling fans) shall be 

taken from the appropriate appendix to 

this rule in effect at the time the labels 

are affixed to the product. The 

Commission shall publish revised 

ranges annually in the Federal Register, 

if appropriate, or a statement that the 

specific prior ranges are still applicable 

for the new year. Ranges will be 

changed if the estimated annual energy 

consumption or energy efficiency 

ratings of the products within the range 

change in a way that would alter the 

upper or lower estimated annual energy 

consumption or energy efficiency rating 

limits of the range by 15% or more from 

that previously published. When a range 

is revised, all information disseminated 

after 90 days following the publication 

of the revision shall conform to the 

revised range. Products that have been 

labeled prior to the effective date of a 

modification under this section need 

not be relabeled. 

* * * * * 

■ 8. Amend § 305.11 by revising 

paragraph (a)(1) and adding paragraph 

(g) to read as follows: 

§ 305.11 Labeling for covered products. 

(a) Labels for covered products other 

than fluorescent lamp ballasts, general 

service fluorescent lamps, medium base 

compact fluorescent lamps, general 

service incandescent lamps (including 

incandescent reflector lamps), 

showerheads, faucets, water closets, 

urinals, and ceiling fans—(1) Layout. 

All energy labels for each category of 

covered product shall use one size, 

similar colors and typefaces with 

consistent positioning of headline, copy 

and charts to maintain uniformity for 

immediate consumer recognition and 

readability. Trim size dimensions for all 

labels shall be as follows: width must be 

between 5 1⁄4 inches and 5 1⁄2 inches 

(13.34 cm. and 13.97 cm.); length must 

be 7 3⁄8 inches (18.73 cm.). Copy is to 


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be set between 27 picas and 29 picas 

and copy page should be centered (right 

to left and top to bottom). Depth is 

variable but should follow closely the 

prototype labels appearing at the end of 

this part illustrating the basic layout. All 

positioning, spacing, type sizes and line 

widths should be similar to and 

consistent with the prototype labels. 

* * * * * 

(g) Ceiling Fans—(1) Content. Any 

covered product that is a ceiling fan 

shall be labeled clearly and 

conspicuously on the principal display 

panel with the following information in 

order from top to bottom on the label: 

(i) The words ‘‘ENERGY 

INFORMATION’’ shall appear at the top 

of the label with the words ‘‘at High 

Speed’’ directly underneath; 

(ii) The product’s airflow at high 

speed expressed in cubic feet per 

minute and determined pursuant to 

§ 305.5 of this part; 

(iii) The product’s electricity usage at 

high speed expressed in watts and 

determined pursuant to § 305.5 of this 

part, including the phrase ‘‘excludes 

lights’’ as indicated in Ceiling Fan Label 

Illustration of Appendix L of this part; 

(iv) The product’s airflow efficiency 

rating at high speed expressed in cubic 

feet per minute per watt and determined 

pursuant to § 305.5 of this part; 

(v) The following statement shall 

appear on the label for fans fewer than 

49 inches in diameter: ‘‘Compare: 36’’ to 

48’’ ceiling fans have airflow 

efficiencies ranging from approximately 

71 to 86 cubic feet per minute per watt 

at high speed.’’; 

(vi) The following statement shall 

appear on the label for fans 49 inches or 

more in diameter: ‘‘Compare: 49’’ to 60’’

ceiling fans have airflow efficiencies 

ranging from approximately 51 to 176 

cubic feet per minute per watt at high 

speed.’’; and 

(vii) The following statements shall 

appear at the bottom of the label as 

indicated in Ceiling Fan Label 

Illustration of Appendix L of this part: 

‘‘Money-Saving Tip: Turn off fan when 

leaving room.’’

(2) Label Size and Text Font. The 

label shall be four inches wide and three 

inches high. The text font shall be Arial 

or another equivalent font. The text on 

the label shall be black with a white 

background. The label’s text size and 

content, and the order of the required 

disclosures shall be consistent with 

Ceiling Fan Label Illustration of 

Appendix L of this part. 

(3) Placement. The ceiling fan label 

shall be printed on the principal display 

panel of the product’s packaging. 

(4) Additional Information: No marks 

or information other than that specified 

in this part shall appear on this label, 

except a model name, number, or 

similar identifying information. 

■ 9. Add § 305.14(e) to read as follows: 

§ 305.14 Catalogs. 

* * * * * * 

(e) Any manufacturer, distributor, 

retailer, or private labeler who 

advertises a covered product that is a 

ceiling fan in a catalog, from which it 

may be purchased, shall disclose clearly 

and conspicuously in such catalog, on 

each page that lists the covered product, 

all the information concerning the 

product required by § 305.11(g)(1). 

■ 10. Amend part 305, Appendix L by 

adding Ceiling Fan Label Illustration at 

the end of the appendix to read as 

follows: 

Appendix L to Part 305—Sample Labels 

* * * * * 


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78066 Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Rules and Regulations 

* * * * * 

By direction of the Commission. 

C. Landis Plummer, 

Acting Secretary. 

[FR Doc. 06–9901 Filed 12–27–06; 8:45 am] 

BILLING CODE 6750–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9307] 

RIN 1545–BC18 

Changes in Computing Depreciation 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final and temporary 

regulations. 

SUMMARY: This document contains 

regulations relating to a change in 

computing depreciation or amortization 

as well as a change from a 

nondepreciable or nonamortizable asset 

to a depreciable or amortizable asset (or 

vice versa). Specifically, these 

regulations provide guidance to any 

taxpayer that makes a change in 

depreciation or amortization on whether 

such a change is a change in method of 

accounting under section 446(e) of the 

Internal Revenue Code and on the 

application of section 1016(a)(2) in 

determining whether the change is a 

change in method of accounting. 

DATES: Effective Date. These regulations 

are effective December 28, 2006. 

Applicability Dates. For dates of 

applicability, see §§ 1.167(e)–1(e), 

1.446–1(e)(4), and 1.1016–3(j). 

FOR FURTHER INFORMATION CONTACT: 

Douglas H. Kim, (202) 622–3110 (not a 

toll-free number). 

SUPPLEMENTARY INFORMATION: 

Background 

This document contains amendments 

to 26 CFR part 1. On January 2, 2004, 

the IRS and Treasury Department 

published temporary regulations (TD 

9105) in the Federal Register (69 FR 5) 

relating to the application of section 

446(e) of the Internal Revenue Code 

(Code) and § 1.167(e)–1 to a change in 

depreciation or amortization and the 

application of section 1016(a)(2) in 

determining whether a change in 

depreciation or amortization is a change 

in method of accounting. On the same 

date, the IRS published a notice of 

proposed rulemaking (REG–126459–03) 

cross-referencing the temporary 

regulations in the Federal Register (69 

FR 42). No public hearing was requested 

or held. Several comments responding 

to the notice of proposed rulemaking 

were received. After consideration of all 

the comments, the proposed regulations 

are adopted as amended by this 

Treasury decision, and the 

corresponding temporary regulations are 

removed. The revisions are discussed 

here in this preamble. 

Section 1400N(d), which was added 

to the Code by section 101(a) of the Gulf 

Opportunity Zone Act of 2005, Public 

Law 109–135 (119 Stat. 2577), generally 

allows a 50-percent additional first year 

depreciation deduction for qualified 

Gulf Opportunity Zone property. The 

final regulations reflect the enactment of 

section 1400N(d). 

Explanation of Provisions 

Scope 

The final regulations provide the 

changes in depreciation or amortization 

(depreciation) for property for which 

depreciation is determined under 

section 167, 168, 197, 1400I, 1400L(b), 

1400L(c), or 1400N(d), or former section 

168, of the Code that are, and those 

changes that are not, changes in method 

of accounting under section 446(e). The 

final regulations also clarify that the 

rules in § 1.167(e)–1 with respect to a 

change in the depreciation method 

made without the consent of the 

Commissioner apply only to property 

for which depreciation is determined 

under section 167 (other than under 

section 168, 1400I, 1400L, or 1400N(d), 

or former section 168). Additionally, the 

final regulations provide that section 

1016(a)(2) does not permanently affect a 

taxpayer’s lifetime income for purposes 

of determining whether a change in 

depreciation is a change in method of 

accounting under section 446(e) and 

§ 1.446–1(e). 

I. Changes in Depreciation Method 

Under Section 167 

The final regulations retain the rules 

contained in the temporary regulations 

providing that the rules in § 1.167(e)–1 

with respect to a change in depreciation 

method under § 1.167(e)–1(b), (c), and 

(d) made without the consent of the 

Commissioner apply only to property 

for which depreciation is determined 

under section 167 (other than under 

section 168, 1400I, 1400L, or 1400N(d), 

or former section 168). No comments 

were received suggesting changes to 

these rules. 

II. Changes in Depreciation That Are, 

and Are Not, a Change in Method of 

Accounting Under Section 446(e) 

The final regulations provide rules on 

the changes in depreciation that are, and 

are not, a change in method of 

accounting under section 446(e). 

A. Changes in Depreciation That Are 

Changes in Method of Accounting 

The final regulations retain the rules 

contained in the temporary regulations 

providing the changes in depreciation 

that are a change in method of 

accounting under section 446(e). These 

changes are a change in the treatment of 

an asset from nondepreciable or 

nonamortizable to depreciable or 

amortizable, or vice versa. Additionally, 

a correction to require depreciation in 

lieu of a deduction for the cost of 

depreciable or amortizable assets that 

had been consistently treated as an 

expense in the year of purchase, or vice 

versa, is a change in method of 

accounting. Further, changes in 

computing depreciation generally are a 

change in method of accounting, 

including a change in the depreciation 

method, period of recovery, or 

convention of a depreciable or 

amortizable asset, and a change to or 

from claiming the additional first year 

depreciation deduction provided by 

section 168(k), 1400L(b), or 1400N(d) 

under certain circumstances. 

No comments were received 

suggesting changes to these rules. 

However, a commentator inquired 

whether a calendar-year taxpayer that 

has not claimed the 30-percent 

additional first year depreciation for 

qualified property acquired after 

September 10, 2001, and placed in 

service prior to January 1, 2002, may 

claim the 30-percent additional first 

year depreciation by requesting a 

change in method of accounting. To 

claim the 30-percent additional first 

year depreciation for this property, Rev. 

Proc. 2003–50 (2003–2 C.B. 119) 

provides that the taxpayer had to file an 

amended return on or before December 

31, 2003, or file a Form 3115, 

‘‘Application for Change in Accounting 

Method,’’ with the taxpayer’s timely 

filed 2003 Federal tax return. If the 

taxpayer did not file this amended 

return or Form 3115, the taxpayer has 

made the deemed election not to deduct 

the additional first year depreciation for 

the 2001 taxable year. Accordingly, the 

taxpayer’s change to claiming the 30- 

percent additional first year 

depreciation for qualified property 

placed in service in the taxable year that 

included September 11, 2001, is not a 

change in method of accounting under 


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