[Federal Register Volume 62, Number 160 (Tuesday, August 19, 1997)]
[Proposed Rules]
[Pages 44099-44102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21922]


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FEDERAL TRADE COMMISSION

16 CFR Part 403


Deceptive Use of ``Leakproof,'' ``Guaranteed Leakproof,'' Etc., 
as Descriptive of Dry Cell Batteries

AGENCY: Federal Trade Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Trade Commission (the ``FTC'' or ``Commission'') 
announces the commencement of a rulemaking proceeding for the Trade 
Regulation Rule on Deceptive Use of ``Leakproof,'' ``Guaranteed 
Leakproof,'' Etc., as Descriptive of Dry Cell Batteries (``the Dry Cell 
Battery Rule'' or ``the Rule''), 16 CFR Part 403. The proceeding will 
address whether or not the Dry Cell Battery Rule should be repealed. 
The Commission invites interested parties to submit written data, 
views, and arguments on how the Rule has affected consumers, businesses 
and others, and on whether there currently is a need for the Rule. This 
document includes a description of the procedures to be followed, an 
invitation to submit written comments, a list of questions and issues 
upon which the Commission particularly desires comments, and 
instructions for prospective witnesses and other interested persons who 
desire to participate in the proceeding.

DATES: Written comments must be submitted on or before September 18, 
1997. Notifications of interest in testifying must be submitted on or 
before September 18, 1997. If interested parties request the 
opportunity to present testimony, the Commission will publish a 
document in the Federal Register, stating the time and place at which 
the hearings will be held and describing the procedures that will be 
followed in conducting the hearings. In addition to submitting a 
request to testify, interested parties who wish to present testimony 
must submit, on or before September 18, 1997, a written comment or 
statement that describes the issues on which the party wishes to 
testify and the nature of the testimony to be given.

ADDRESSES: Written comments and requests to testify should be submitted 
to Office of the Secretary, Federal Trade Commission, Room H-159, Sixth 
and Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2506. 
Comments and requests to testify should be identified as ``16 CFR Part 
403 Comment--Dry Cell Battery Rule'' and ``16 CFR Part 403 Request to 
Testify--Dry Cell Battery Rule,'' respectively. If possible, submit 
comments both in writing and on a personal computer diskette in Word 
Perfect or other word processing format (to assist in processing, 
please identify the format and version used). Written comments should 
be submitted, when feasible and not burdensome, in five copies.

FOR FURTHER INFORMATION CONTACT:
Neil Blickman, Attorney, Federal Trade Commission, Bureau of Consumer 
Protection, Division of Enforcement, Sixth and Pennsylvania Ave., NW., 
Washington, DC 20580, (202) 326-3038.

SUPPLEMENTARY INFORMATION:

I. Introduction

    Pursuant to the Federal Trade Commission Act (``FTC Act''), 15 
U.S.C. 41-58, and the Administrative Procedure Act, 5 U.S.C. 551-59, 
701-06, by this Notice of Proposed Rulemaking

[[Page 44100]]

(``NPR'') the Commission initiates a proceeding to consider whether the 
Dry Cell Battery Rule should be repealed or remain in effect.\1\ The 
Commission is undertaking this rulemaking proceeding as part of the 
Commission's ongoing program of evaluating trade regulation rules and 
industry guides to determine their effectiveness, impact, cost and 
need. This proceeding also responds to President Clinton's National 
Regulatory Reinvention Initiative, which, among other things, urges 
agencies to eliminate obsolete or unnecessary regulations.
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    \1\ In accordance with section 18 of the FTC Act, 15 U.S.C. 57a, 
the Commission submitted this NPR to the Chairman of the Committee 
on Commerce, Science, and Transportation, United States Senate, and 
the Chairman of the Committee on Commerce, United States House of 
Representatives, 30 days prior to its publication in the Federal 
Register.
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II. Background Information

    On May 20, 1964, the Commission promulgated a trade regulation rule 
that states that in connection with the sale of dry cell batteries in 
commerce, the use of the word ``leakproof,'' the term ``guaranteed 
leakproof,'' or any other word or term of similar import, or any 
abbreviation thereof, in advertising, labeling, marking or otherwise, 
as descriptive of dry cell batteries, constitutes an unfair method of 
competition and an unfair or deceptive act or practice in violation of 
section 5 of the FTC Act (16 CFR 403.4). This Rule was based on the 
Commission's finding that, despite efforts by dry cell battery 
manufacturers to eliminate electrolyte leakage, battery leakage and 
damage therefrom occurs from the use to which consumers ordinarily 
subject dry cell batteries.
    The Rule provides that manufacturers or marketers are not 
prohibited from offering or furnishing guarantees that provide for 
restitution in the event of damage from battery leakage, provided no 
representation is made, directly or indirectly, that dry cell batteries 
will not leak (16 CFR 403.5). The Rule further provides that in the 
event any person develops a new dry cell battery that he believes is in 
fact leakproof, he may apply to the Commission for an amendment to the 
Rule, or other appropriate relief (16 CFR 403.6).
    The Commission conducted an informal review of industry practices 
by examining the advertising, labeling and marking of dry cell 
batteries available for retail sale. This review revealed no 
representations that the batteries were leakproof. The Commission's 
review, therefore, indicated general compliance with the Rule's 
provisions. Moreover, the Commission has no record of receiving any 
complaints regarding non-compliance with the Rule, or of initiating any 
law enforcement actions alleging violations of the Rule.
    Additionally, the Commission's review indicated general voluntary 
compliance by the industry with the requirements of American National 
Standards Institute (``ANSI'') Standard C18.1M-1992 Dry Cells and 
Batteries--Specifications. The ANSI standard contains specifications 
for dry cell batteries, and requirements for labeling the products and 
their packages. The ANSI standard requires the following information to 
be printed on the outside of each battery (when necessary, the standard 
permits some of this information to be applied to the unit package): 
(1) the name or trade name of the manufacturer; (2) the ANSI/National 
Electronic Distributors Association number, or some other identifying 
designation; (3) year and month, week or day of manufacture, which may 
be a code, or the expiration of a guarantee period, in a clear readable 
form; (4) the nominal voltage; (5) terminal polarity; and (6) warnings 
or cautionary notes where applicable.\2\
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    \2\ See section 8.1 of ANSI Standard C18.1M-1992.
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    The ANSI standard recommends that dry cell battery manufacturers 
and sellers include on their products and packages several battery user 
guidelines and warnings that are relevant to this proceeding. They are: 
(1) although batteries basically are trouble-free products, conditions 
of abuse or misuse can cause leakage; (2) failure to replace all 
batteries in a unit at the same time may result in battery leakage; (3) 
mixing batteries of various chemical systems, ages, applications, types 
or manufacturers may result in poor device performance and battery 
leakage; (4) attempting to recharge a non-rechargeable battery is 
unsafe because it could cause leakage; (5) reverse insertion of 
batteries may cause charging, which may result in leakage; (6) devices 
that operate on either household current or battery power may subject 
batteries to a charging current, which may cause leakage; (7) do not 
store batteries or battery-powered equipment in high-temperature areas; 
and (8) do not dispose of batteries in fire.\3\ At a minimum, each dry 
cell battery and battery package inspected by Commission staff informed 
consumers that the batteries may explode or leak if recharged, inserted 
improperly, disposed of in fire, or mixed with different battery types.
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    \3\ See section 7.5 of ANSI Standard C18.1M-1992.
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    Based on the foregoing, on March 25, 1997, the Commission published 
an Advance Notice of Proposed Rulemaking (``ANPR'') tentatively 
concluding that industry members that comply with the ANSI standard's 
point-of-sale disclosure requirements, of necessity, also are in 
compliance with the Rule. Accordingly, the Commission tentatively 
determined that the Dry Cell Battery Rule is no longer necessary, and 
sought comments on the proposed repeal of the Rule.\4\
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    \4\ 62 FR 14050.
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    The only comment received in response to the ANPR was submitted by 
the National Electrical Manufacturers Association (``NEMA''), a trade 
association representing all major U.S. manufacturers of dry cell 
batteries.\5\ NEMA supports repeal of the Commission's Dry Cell Battery 
Rule, indicating that it has been superseded effectively in the 
marketplace by ANSI Standard C18.1M-1992.\6\
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    \5\ The comment submitted in response to the ANPR has been 
placed on the public record, and is filed as document number 
B21969700001. In today's notice, the comment is cited as NEMA, #1.
    \6\ NEMA, #1.
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    Accordingly, after reviewing the comment submitted, and in light of 
ANSI Standard C18.1M-1992, the Commission has determined that the Dry 
Cell Battery Rule is no longer necessary.\7\ The Commission, therefore, 
seeks comments on the proposed repeal of the Dry Cell Battery Rule.
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    \7\ Repealing the Dry Cell Battery Rule would eliminate the 
Commission's ability to obtain civil penalties for any future 
misrepresentations that dry cell batteries are leakproof. The 
Commission, however, has tentatively determined that repealing the 
Rule would not seriously jeopardize the Commission's ability to act 
effectively. Any significant problems that might arise could be 
addressed on a case-by-case basis under section 5 of the FTC Act, 15 
U.S.C. 45, either administratively or through Section 13(b) actions, 
15 U.S.C. 53(b), filed in federal district court. Prosecuting 
serious misrepresentations in district court allows the Commission 
to obtain injunctive relief as well as equitable remedies, such as 
redress or disgorgement.
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III. Rulemaking Procedures

    The Commission finds that the public interest will be served by 
using expedited procedures in this proceeding. First, there do not 
appear to be any material issues of disputed fact to resolve in 
determining whether to repeal the Rule. Second, using expedited 
procedures will support the Commission's goal of eliminating obsolete 
or unnecessary regulations without an undue expenditure of resources, 
while ensuring that the public has an opportunity to submit data, views 
and arguments on whether the Commission should repeal the Rule.
    The Commission, therefore, has determined, pursuant to 16 CFR 1.20, 
to use the procedures set forth in this notice. These procedures 
include: (1)

[[Page 44101]]

publishing this Notice of Proposed Rulemaking; (2) soliciting written 
comments on the Commission's proposal to repeal the Rule; (3) holding 
an informal hearing, if requested by interested parties; (4) obtaining 
a final recommendation from staff; and (5) announcing final Commission 
action in a notice published in the Federal Register.

IV. Invitation To Comment And Questions For Comment

    Interested persons are required to submit written data, views or 
arguments on any issue of fact, law or policy they believe may be 
relevant to the Commission's decision on whether to repeal the Rule. 
The Commission requests that commenters provide representative factual 
data in support of their comments. Individual firms' experiences are 
relevant to the extent they typify industry experience in general or 
the experience of similar-sized firms. Commenters opposing the proposed 
repeal of the Rule should explain the reasons they believe the Rule is 
still needed and, if appropriate, suggest specific alternatives. 
Proposals for alternative requirements should include reasons and data 
that indicate why the alternatives would better protect consumers from 
unfair or deceptive acts or practices under section 5 of the FTC Act, 
15 U.S.C. 45.
    Although the Commission welcomes comments on any aspect of the 
proposed repeal of the Rule, the Commission is particularly interested 
in comments on questions and issues raised in this Notice. All written 
comments should state clearly the question or issue that the commenter 
is addressing.
    Before taking final action, the Commission will consider all 
written comments timely submitted to the Secretary of the Commission 
and testimony given on the record at any hearings scheduled in response 
to requests to testify. Written comments submitted will be available 
for public inspection in accordance with the Freedom of Information 
Act, 5 U.S.C. 552, and Commission regulations, on normal business days 
between the hours of 8:30 a.m. to 5:00 p.m. at the Federal Trade 
Commission, Public Reference Room, Room H-130, Sixth St. and 
Pennsylvania Ave., NW., Washington, DC 20580, (202) 326-2222.

Questions

    (1) Should the Dry Cell Battery Rule be kept in effect, or should 
it be repealed?
    (2) What benefits do consumers derive from the Rule?
    (3) How would repealing the Rule affect the benefits experienced by 
consumers?
    (4) How would repealing the Rule affect the benefits and burdens 
experienced by firms that must comply with the Rule?
    (5) Are ``leakproof'' or ``guaranteed leakproof'' representations a 
significant problem in the marketplace?
    (6) Are there any other federal, state, or local laws or 
regulations, or private industry standards, that eliminate the need for 
the Rule?
    (7) Does the existence of ANSI Standard C18.1M-1992 for Dry Cell 
Batteries eliminate or greatly lessen the need for the Rule?

V. Requests for Public Hearings

    Because there does not appear to be any dispute as to the material 
facts or issues raised by this proceeding and because written comments 
appear adequate to present the views of all interested parties, a 
public hearing has not been scheduled. If any person would like to 
present testimony at a public hearing, he or she should follow the 
procedures set forth in the DATES and ADDRESSES sections of this 
notice.

VI. Preliminary Regulatory Analysis

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-12, requires 
an analysis of the anticipated impact of the proposed repeal of the 
Rule on small businesses.\8\ The analysis must contain, as applicable, 
a description of the reasons why action is being considered, the 
objectives of and legal basis for the proposed action, the class and 
number of small entities affected, the projected reporting, 
recordkeeping and other compliance requirements being proposed, any 
existing federal rules which may duplicate, overlap or conflict with 
the proposed action, and any significant alternatives to the proposed 
action that accomplish its objectives and, at the same time, minimize 
its impact on small entities.
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    \8\ Section 22 of the FTC Act, 15 U.S.C. 57b-3, also requires 
the Commission to issue a preliminary regulatory analysis relating 
to proposed rules when the Commission publishes a notice of proposed 
rulemaking. The Commission has determined that a preliminary 
regulatory analysis is not required by section 22 in this proceeding 
because the Commission has no reason to believe that repeal of the 
Rule: (1) will have an annual effect on the national economy of 
$100,000,000 or more; (2) will cause a substantial change in the 
cost or price of goods or services that are used extensively by 
particular industries, that are supplied extensively in particular 
geographical regions, or that are acquired in significant quantities 
by the Federal Government, or by State or local governments; or (3) 
otherwise will have a significant impact upon persons subject to the 
Rule or upon consumers.
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    A description of the reasons why action is being considered and the 
objectives of the proposed repeal of the Rule have been explained 
elsewhere in this Notice. Repeal of the Rule would appear to have 
little or no effect on any small business. The Commission is not aware 
of any existing federal laws or regulations that would conflict with 
repeal of the Rule.
    For these reasons, the Commission certifies, pursuant to section 
605 of RFA, 5 U.S.C. 605, that if the Commission determines to repeal 
the Rule, that action will not have a significant impact on a 
substantial number of small entities. To ensure that no substantial 
economic impact is being overlooked, however, the Commission requests 
comments on this issue. After reviewing any comments received, the 
Commission will determine whether it is necessary to prepare a final 
regulatory flexibility analysis.

VII. Paperwork Reduction Act

    The Dry Cell Battery Rule imposes no third-party disclosure 
requirements that constitute ``information collection requirements'' 
under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Since 1964, 
therefore, the Rule has imposed no paperwork burdens on marketers of 
dry cell batteries. In any event, repeal of the Dry Cell Battery Rule 
would permanently eliminate any burdens on the public imposed by the 
Rule.

VIII. Additional Information for Interested Persons

A. Motions or Petitions

    Any motions or petitions in connection with this proceeding must be 
filed with the Secretary of the Commission.

B. Communications by Outside Parties to Commissioners or Their Advisors

    Pursuant to Rule 1.18(c) of the Commission's Rules of Practice, 16 
CFR 1.18(c), communications with respect to the merits of this 
proceeding from any outside party to any Commissioner or Commissioner's 
advisor during the course of this rulemaking shall be subject to the 
following treatment. Written communications, including written 
communications from members of Congress, shall be forwarded promptly to 
the Secretary for placement on the public record. Oral communications, 
not including oral communications from members of Congress, are 
permitted only when such oral communications are transcribed verbatim 
or summarized at the discretion of the Commissioner or Commissioner's 
advisor to whom such oral communications are made, and are

[[Page 44102]]

promptly placed on the public record, together with any written 
communications relating to such oral communications. Memoranda prepared 
by a Commissioner or Commissioner's advisor setting forth the contents 
of any oral communications from members of Congress shall be placed 
promptly on the public record. If the communication with a member of 
Congress is transcribed verbatim or summarized, the transcript or 
summary will be placed promptly on the public record.

    Authority: 15 U.S.C. 41-58.

List of Subjects in 16 CFR Part 403

    Advertising, Dry cell batteries, Labeling, Trade practices.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 97-21922 Filed 8-18-97; 8:45 am]
BILLING CODE 6750-01-M