Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules 14049

1An imitation political item is ‘‘an item which

purports to be, but in fact is not, an original

political item, or which is a reproduction, copy, or

counterfeit of an original political item.’’ 15 U.S.C.

2106(2).

2An imitation numismatic item is ‘‘an item

which purports to be, but in fact is not, an original

numismatic item or which is a reproduction, copy,

or counterfeit of an original numismatic item.’’ 15

U.S.C. 2106(4).

3 Prior to the amendment, if a coin were too small

to comply with the minimum letter size

requirements, the manufacturer or importer had to

individually request from the Commission a

variance from those requirements. Because

imitation miniature coins were becoming more

common, the Commission determined that it was in

the public interest to allow the placing of the word

‘‘copy’’ on miniature imitation coins in sizes that

could be reduced proportionately with the size of

the item.

FEDERAL TRADE COMMISSION

16 CFR Part 304

Request for Comments Concerning

Rules and Regulations Under the

Hobby Protection Act

AGENCY: Federal Trade Commission

(‘‘FTC’’ or ‘‘Commission’’).

ACTION: Request for public comments.

SUMMARY: The Federal Trade

Commission requests public comments

on its Rules and Regulations Issued

Under the Hobby Protection Act (‘‘the

Rule’’). The Commission, as a part of its

systematic review of all current

Commission regulations and guides,

requests comments about the overall

costs, benefits, and regulatory and

economic impact of the Rule. Further,

the Commission, as mandated by the

Regulatory Flexibility Act, 5 U.S.C. 601,

seeks information about the impact of

the Rule on small business firms.

DATES: Written comments will be

accepted until May 27, 1997.

ADDRESS: Comments should be should

be identified as ‘‘16 CFR Part 304—

Comment’’ and sent to: Secretary, FTC,

Room H–159, Sixth and Pennsylvania

Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Robert E. Easton, Special Assistant,

Division of Enforcement, Bureau of

Consumer Protection, FTC, Washington,

D.C. 20580, (202) 326–3029.

SUPPLEMENTARY INFORMATION: The

Commission has determined, as part of

its oversight responsibilities, to review

its rules and guides periodically to seek

information about their costs and

benefits and their regulatory and

economic impact. The information

obtained will assist the Commission in

identifying rules and guides that

warrant modification or rescission.

Where appropriate, the Commission

will combine such periodic general

reviews with reviews seeking

information about the economic impact

of the rule on small business firms as

required by the Regulatory Flexibility

Act.

A. Background

On November 29, 1973, Congress

passed the Hobby Protection Act

(‘‘Act’’), 15 U.S.C. 2101–2106. The Act

requires manufacturers and importers of

‘‘imitation political items’’ 1 to mark

‘‘plainly and permanently’’ such items

with the ‘‘calendar year’’ such items

were manufactured. 15 U.S.C. 2101(a).

The Act also requires manufacturers and

importers of ‘‘imitation numismatic

items’’ 2 to mark ‘‘plainly and

permanently’’ such items with the word

‘‘copy.’’ 15 U.S.C. 2101(b). The Act

further provides that the Commission is

to promulgate regulations for

determining the ‘‘manner and form’’

imitation political items and imitation

numismatic items are to be permanently

marked with the calendar year of

manufacture or the word ‘‘copy.’’ 15

U.S.C. 2101(c).

Pursuant to the Act, in 1975 the

Commission issued Rules and

Regulations under the Hobby Protection

Act, 16 CFR Part 304. The Rule tracks

the definitions of terms used in the Act

and implements the Act’s ‘‘plain and

permanent’’ marking requirements by

establishing the sizes and dimensions of

the letters and numerals to be used, the

location of the marking on the item, and

how to mark incusable and

nonincusable items. In 1988, the Rule

was amended to provide additional

guidance on the minimum size of letters

for the word ‘‘copy’’ as a proportion of

the diameter of the diameter of coin

reproductions.3 53 FR 38942 (1988).

In preparation for the reviews of the

Rule, staff undertook a limited inquiry

to ascertain the degree of compliance

with the Rule. Based on this inquiry, it

appears that there is a high level of

compliance with the Rule, both as to

imitation political items and imitation

numismatic items.

B. Issues for Comment

The Commission solicits written

public comments on the following

questions:

(1) Do there continue to be reasons for

legislative and regulatory intervention

in the sale and marking of imitation

political items and imitation

numismatic items, but not for other

items collected by hobbyists (e.g.,

stamps)? If so, please explain.

(a) What benefits has the Rule

provided to purchasers of the products

or services affected by the Rule?

(b) Has the Rule imposed costs on

purchasers?

(2) What changes, if any, should be

made to the Rule to increase the benefits

of the Rule to purchasers?

(a) How would these changes affect

the costs the Rule imposes on firms

subject to its requirements?

(3) What significant burdens or costs,

including costs of compliance, has the

Rule imposed on firms subject to its

requirements?

(a) Has the Rule provided benefits to

such firms?

(4) What changes, if any, should be

made to the Rule to reduce the burdens

or costs imposed on firms subject to its

requirements?

(a) How would these changes affect

the benefits provided by the Rule?

(5) Does the Rule overlap or conflict

with other federal, state, or local laws or

regulations?

(6) Since the Rule was issued, what

effects, if any, have changes in relevant

technology or economic conditions had

on the Rule?

(7) What significant burdens or costs,

including costs of compliance, has the

Rule imposed on small firms subject to

its requirements?

(a) How do these burdens or costs

differ from those imposed on larger

firms subject to the Rule’s requirements?

(8) To what extent are the burdens or

costs that the Rule imposes on small

firms similar to those small firms would

incur under standard and prudent

business practices?

(9) What changes, if any, should be

made to the Rule to reduce the burdens

or costs imposed on small firms?

(a) How would these changes affect

the benefits of the Rule?

(b) Would such changes adversely

affect the competitive position of larger

firms?

(10) The Rule currently mandates the

minimum sizes for the calendar year to

be marked on imitation political items

and for the word ‘‘copy’’ to be marked

on imitation numismatic items.

(a) Should the Commission amend the

Rule to replace the mandated minimum

sizes with a performance based standard

(e.g., clear and prominent disclosure)?

(b) If so, what should the performance

based standard be?

(c) What would be the costs and

benefits of the proposed performance

based standard?

List of Subjects in 16 CFR Part 304

Hobbies, Labeling, Trade practices.

Authority: 15 U.S.C. 41–58.
14050 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Proposed Rules

1See section 8.1 of ANSI Standard C18.1M–1992.

2See section 7.5 of ANSI Standard C18.1M–1992.

3Repealing 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) action, 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.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 97–7434 Filed 3–24–97; 8:45 am]

BILLING CODE 7518–01–M

16 CFR Part 403

Deceptive Use of ‘‘Leakproof,’’

‘‘Guaranteed Leakproof,’’ Etc., as

Descriptive of Dry Cell Batteries

AGENCY: Federal Trade Commission.

ACTION: Advance notice of proposed

rulemaking.

SUMMARY: The Federal Trade

Commission (the ‘‘FTC’’ or

‘‘Commission’’) proposes to commence

a rulemaking proceeding to repeal its

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 Commission is soliciting written

comments, data, and arguments

concerning this proposal. The

Commission also is requesting

comments about the overall costs and

benefits of the Rule and its overall

regulatory and economic impact as a

part of its systematic review of all

current Commission regulations and

guides.

DATES: Written comments must be

submitted on or before April 24, 1997.

ADDRESSES: Written comments should

be identified as ‘‘16 CFR Part 403

Comment’’ and sent to Secretary,

Federal Trade Commission, Room 159,

Sixth St. and Pennsylvania Ave., N.W.,

Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Neil

Blickman, Attorney, FTC, Bureau of

Consumer Protection, Division of

Enforcement, Sixth St. and

Pennsylvania Ave., N.W., Washington,

DC 20580, (202) 326–3038.

SUPPLEMENTARY INFORMATION:

Part A—Background Information

This notice is being published

pursuant to Section 18 of the Federal

Trade Commission (‘‘FTC’’) Act, 15

U.S.C. 57a et seq., the provisions of Part

1, Subpart B of the Commission’s Rules

of Practice, 16 CFR 1.7 et seq., and 5

U.S.C. et seq. This authority permits the

Commission to promulgate, modify, and

repeal trade regulations rules that define

with specificity acts or practices that are

unfair or deceptive in or affecting

commerce within the meaning of

Section 5(a)(1) of the FTC Act, 15 U.S.C.

45(a)(1).

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 does not prohibit

manufacturers or marketers 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. The products, packaging

and advertising inspected contained no

presentations that the batteries so

described 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 noncompliance 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.1

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 nonrechargeable 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.2

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. Based on the

foregoing, the Commission has

tentatively concluded that industry

members that comply with the

standard’s point-of-sale disclosure

requirements, of necessity, also are in

compliance with the Rule.

Part B—Objectives

Based on the review described above,

the Commission has tentatively

determined that the Rule is no longer

necessary.3 the objective of this notice is