67102 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

1The Rule was amended on May 20, 1983, 48 FR

22733 (1983).

2The commenters included cleaners; consumers;

public interest-related groups; fiber, textile, or

apparel manufacturers or sellers (or conglomerates);

federal government entities; fiber, textile, or apparel

manufacturers or retailers trade associations; two

label manufacturers; one cleaning products

manufacturer; one association representing the

leather apparel industry; one Committee formed by

industry members from the countries signatory to

NAFTA; one appliance technician; one appliance

manufacturers trade association; two standardssetting organizations; and two representatives from

foreign nations. The comments are on the public

record and are available for public inspection in

accordance with the Freedom of Information Act, 5

U.S.C. 552, and the Commission’s Rules of Practice,

16 CFR 4.11, during normal business days from 8:30

a.m. to 5 p.m., at the Public Reference Room, Room

130, Federal Trade Commission, 6th and

Pennsylvania Avenue, NW, Washington, D.C. The

comments are referred to within this Advance

Notice of Proposed Rulemaking (‘‘ANPR’’) by their

name and the number assigned to each submitted

comment.

Regulation K would not have a

significant economic impact on a

substantial number of small entities that

are subject to its regulation.

List of Subjects in 12 CFR Part 211

Exports, Federal Reserve System,

Foreign banking, Holding companies,

Investments, Reporting and

recordkeeping requirements.

For the reasons set out in the

preamble, the Board proposes to amend

12 CFR Part 211 as set forth below:

PART 211—INTERNATIONAL

BANKING OPERATIONS

(REGULATION K)

1. The authority citation for Part 211

continues to read as follows:

Authority: 12 U.S.C. 221 et seq., 1818,

1841 et seq., 3101 et seq., 3901 et seq.

2. In § 211.22, paragraph (a) is revised;

paragraph (c) is removed; and paragraph

(d) is redesignated as paragraph (c) to

read as follows:

§ 211.22 Interstate banking operations of

foreign banking organizations.

(a) Determination of home state. (1) A

foreign bank (except a foreign bank to

which paragraph (a)(2) of this section

applies) that has any combination of

domestic agencies or subsidiary

commercial lending companies that

were established before September 29,

1994, in more than one state and have

been continuously operated shall select

its home state from those states in

which such offices or subsidiaries are

located. A foreign bank shall do so by

filing with the Board a declaration of

home state by March 31, 1996. In the

absence of such selection, the Board

shall designate the home state for such

foreign banks.

(2) A foreign bank that, as of

September 29, 1994, had declared a

home state or had a home state

determined pursuant to the law and

regulations in effect prior to that date

shall have that state as its home state.

(3) A foreign bank that has any

branches, agencies, subsidiary

commercial lending companies, or

subsidiary banks in one state, and has

no such offices or subsidiaries in any

other states, shall have as its home state

the state in which such offices or

subsidiaries are located.

* * * * *

By order of the Board of Governors of the

Federal Reserve System, December 21, 1995.

Jennifer J. Johnson,

Deputy Secretary of the Board.

[FR Doc. 95–31364 Filed 12–27–95; 8:45 am]

BILLING CODE 6210–01–P

FEDERAL TRADE COMMISSION

16 CFR Part 423

Trade Regulation Rule on Care

Labeling of Textile Wearing Apparel

and Certain Piece Goods

AGENCY: Federal Trade Commission.

ACTION: Advance Notice of Proposed

Rulemaking.

SUMMARY: The Federal Trade

Commission (the ‘‘Commission’’)

proposes to commence a rulemaking

proceeding to amend its Trade

Regulation Rule on Care Labeling of

Textile Wearing Apparel and Certain

Piece Goods, 16 CFR Part 423 (‘‘the Care

Labeling Rule’’ or ‘‘the Rule’’). The

Commission seeks comment on whether

the definitions of water temperatures in

the Appendix of the Rule should be

amended. In addition, the Commission

seeks comment on possible alternatives

for amending the Rule’s current

requirement that either a washing

instruction or a dry cleaning instruction

may be used. Finally, the Commission

seeks comment on whether the

reasonable basis portion of the Rule

should be amended.

DATE: Written comments must be

submitted on or before March 13, 1996.

ADDRESSES: Written comments should

be identified as ‘‘16 CFR Part 423’’ and

sent to Secretary, Federal Trade

Commission, Room 159, Sixth Street

and Pennsylvania Ave., NW.,

Washington D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Constance M. Vecellio or Laura Koss,

Attorneys, Federal Trade Commission,

Division of Enforcement, Bureau of

Consumer Protection, Sixth Street and

Pennsylvania, Ave., NW., S–4302,

Washington, DC 20580, (202) 326–2966

or (202) 326–2890.

SUPPLEMENTARY INFORMATION:

Part A—General 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, and 5 U.S.C. 551

et seq. This authority permits the

Commission to promulgate, modify, and

repeal trade regulation 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).

The Care Labeling Rule was

promulgated by the Commission on

December 16, 1971, 36 FR 23883 (1971).

In 1983, the Commission amended the

Rule to clarify its requirements by

identifying in greater detail the washing

or dry cleaning information to be

included on care labels.1 The Care

Labeling Rule, as amended, requires

manufacturers and importers of textile

wearing apparel and certain piece goods

to attach care labels to these items

stating ‘‘what regular care is needed for

the ordinary use of the product.’’ (16

CFR 423.6(a) and (b)). The Rule also

requires that the manufacturer or

importer possess, prior to sale, a

reasonable basis for the care

instructions. (16 CFR 423.6(c)).

As part of its continuing review of its

trade regulation rules to determine their

current effectiveness and impact, the

Commission published a Federal

Register notice (‘‘FRN’’) on June 15,

1994. This FRN sought comment on the

standard regulatory review questions,

such as what changes in the Rule would

increase the benefits of the Rule to

purchasers and how those changes

would affect the costs the Rule imposes

on firms subject to its requirements.

The FRN elicited 81 comments.2 The

comments generally expressed

continuing support for the Rule, stating

that correct care instructions benefit

consumers by extending the useful life

of the garment, by helping the consumer

maximize the appearance of the

garment, and/or by allowing the

consumer to take the ease and cost of

care into consideration when making a

purchase. Most comments said that the

costs imposed on consumers because of

the Rule were minimal when compared

to the benefits. Based on this review, the

Commission has determined to retain

the Rule, but to seek additional
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67103

3Comment 58, p.1; see also Drycleaners Fund (65)

p.4. LAA stated that consumers ‘‘would benefit

from having a label that, in so many words, advises

consumers that leather requires special care * * *.’’

Comment 58, p.1. However, it seems probable that

most consumers know that leather requires special

care; in the absence of evidence to the contrary, the

Commission cannot conclude that it is unfair or

deceptive for manufacturers of leather garments to

fail to disclose this information. Secondly, LAA

stated that leather cleaning ‘‘is more art than

science’’ and that any care label ‘‘must be nonspecific as to the cleaning process.’’ LAA suggested

a label that simply states ‘‘Do not wash or dry clean

by fabric method. Take to a leather expert.’’ Id.

Such a label is unlikely to significantly assist the

average dry cleaner, who presumably already

knows that conventional dry cleaner, who

presumably used on leather garments and knows

whether or not he has the ability to clean leather

garments.

4Comment 70, p.1.

5 16 CFR Part 423, Appendix A, 2.c.

6Association of Home Appliance Manufacturers

(53) p.2.

7Bruce W. Fifield (62) p.1.

8 Id.

9 16 CFR Part 423, Appendix A, 2.a.

10Comment 34, p.1.

11 Jo Ann Pullen (44) p.3.

12PCE has been designated as a hazardous air

pollutant under Section 112 of the Clean Air Act

and under many state air toxics regulations. On

September 15, 1993, EPA set national emission

standards for new and existing PCE dry cleaning

facilities. According to a study conducted on Staten

Island and in New Jersey, PCE is among the toxic

air pollutants found at the highest concentrations in

urban air.

13 59 FR 30733–34. See also EPA (73) p.1.

14Baby Togs, Inc. (2) p.2; The Warren

Featherbone Co. (33) p.3; VF Corp. (36) p.5.

comment on possible amendments to

the Rule as discussed below.

The FRN sought comment on possible

amendments, which are addressed

below, in this ANPR, including: (1)

Whether the Rule should be amended to

require labeling instructions for both

washing and dry cleaning, rather than

for just one method of cleaning and (2)

whether the reasonable basis standard

set forth in the Rule should be clarified

or changed. The comments also

recommended that the Commission

consider other amendments, which also

are addressed in detail below.

Several comments suggested

expanding the coverage of the Rule. The

Leather Apparel Association (‘‘LAA’’)

suggested that garments made

completely of leather be included in the

Rule, which now applies only to textile

wearing apparel and certain piece

goods.3 J.C. Penney suggested that

consumers would benefit by expanding

the Rule to cover items such as ‘‘towels,

sheets, window coverings and other

textile home furnishing products.’’4

However, the Commission considered

and rejected including these product

categories when it amended the Rule in

1983. The comments do not provide

sufficient evidence for reopening these

issues.

Part B—Objectives the Commission

Seeks To Achieve and Possible

Regulatory Alternatives

1. Definitions of Water Temperature in

the Appendix

a. Background

Some comments recommended that

the Commission revise the definition of

cold water temperature in the Appendix

to the Rule. The Appendix to the Rule

currently states that ‘‘cold’’ water means

‘‘cold tap water up to 85 degrees F (29

degrees C).’’ 5 Commenters noted that

tap water temperatures vary across the

United States, and that such differences

can cause problems in washing clothes

because, in the winter in colder parts of

the country, granular detergents may not

fully dissolve and activate during a cold

wash cycle.6 An appliance technician

from Maine noted that consumers may

hesitate to use hotter water when the

label advises to use ‘‘cold’’ water.7 As a

result, clothes may not be thoroughly

cleaned and may be left with soap

residue.8

Other comments suggested that the

Rule’s definition of hot water (up to 150

degrees F, or 66 C) 9 should be changed.

The American Association of Textile

Chemists and Colorists (‘‘AATCC’’)

commented that the temperatures stated

in the Appendix to the Rule should be

changed to match the AATCC

definitions, which the AATCC believes

‘‘more accurately reflect current

washing machine settings and consumer

practice.’’ 10 The AATCC defines ‘‘hot’’

as 120 F plus or minus 5 (49 C plus or

minus 3). Another commenter noted the

variances in temperature definitions

within the NAFTA countries and

suggested they should be harmonized.11

b. Objectives and Regulatory

Alternatives

The Commission believes that the

definition of cold water in the Appendix

may need to be revised to ensure that

consumers understand that washing

clothes in extremely cold water may not

be effective. In addition, the

Commission believes that the

definitions of warm and hot water may

need to be changed to ‘‘more accurately

reflect current washing machine settings

and consumer practice.’’ Accordingly,

the Commission seeks comment on

whether the Commission should amend

the Rule to change the definitions of

‘‘warm’’ and ‘‘hot’’ water, or to include

a new term such as ‘‘cool’’ or

‘‘lukewarm’’ in the Appendix. The

Commission further seeks comment on

whether the Rule should be amended to

state that care labels recommending

‘‘cold’’ wash must define the highest

acceptable temperature for ‘‘cold’’ on

the label, and on the benefits and costs

to consumers and manufacturers of such

an amendment.

2. Environmental Issues

a. Background

In the June 1994 FRN, the

Commission stated that, because of

evidence that dry cleaning solvents are

damaging to the environment, the

Environmental Protection Agency

(‘‘EPA’’) was interested in reducing the

use of such solvents. The Commission

stated that EPA’s Office of Pollution

Prevention and Toxics had been

working with the dry cleaning industry

to reduce the public’s exposure to

perchloroethylene (‘‘PCE’’), the most

common dry cleaning solvent.12 In

connection with this effort, EPA has

published a summary of a process

referred to as ‘‘Multiprocess Wet

Cleaning,’’ which is an alternative

cleaning process that relies on the

controlled application of heat, steam

and natural soaps to clean clothes that

would ordinarily be dry cleaned.13

The FRN asked whether the current

Rule may pose an impediment to

reducing solvent use because it requires

either a washing instruction or a dry

cleaning instruction; it does not require

both. Thus, garments that can legally be

labeled with a ‘‘dry clean’’ instruction

alone also may be washable, a fact not

ascertainable from such an instruction.

If the Rule were amended to require

both washing and dry cleaning

instructions for garments cleanable by

both methods, consumers and cleaners

could make more informed choices and

the use of dry cleaning solvents might

be lessened. To solicit comment on

these issues, the Commission posed a

series of questions in the FRN, each of

which is separately addressed below:

(i) Does the current Rule pose an

impediment to the EPA’s goal of

reducing the use of dry cleaning

solvents? Nine commenters addressed

this question. Three responded simply

that the Rule does not pose an

impediment to EPA’s goals.14 Six others,

however, contended that the current

Rule impedes EPA’s goal of reducing the

use of dry cleaning solvents by

permitting manufacturers to disclose

only one cleaning instruction when a
67104 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

15Business Habits, Inc. (38) p.4 (the current Rule

is a disincentive for the dry cleaner to consider

washing or professional wet cleaning when the

labels state ‘‘Dry Clean Only’’); Mothers & Others

(22) pp.1–4 (unless consumers are informed of their

options, the market will be skewed in favor of dry

cleaning and consumers may not use cheaper

methods (home laundering) and/or safer methods

(professional wet cleaning)); Aqua Clean System

(20) p.4; Ecofranchising, Inc. (28) pp.3–4; Jo Ann

Pullen (44) p.7; Center for Neighborhood

Technology (59) pp.2–3.

16Baby Togs, Inc. (2) p.2.

17Carter’s (24) p.3.

18OshKosh B’Gosh, Inc. (27) p.2.

19Aqua Clean System (20) p.4; Ecofranchising,

Inc. (28) pp.3–4.

20The Warren Featherbone Co. (33) p.1–2, 3;

Clothing Manufacturers Association (40) p.1; Salant

Corp. (52) p.1. See also Braham Norwick (25) p.3.

21See, e.g., Benjamin Axleroad (1) p.1; Don

Pietsch (3) p.1; Evelyn Borrow (4) p.1; Claudia G.

Pasche (5) p.1; Margaret S. Jones (6) p.1; Judith S.

Barton (7) p.1; Virginia J. Martin (8) p.1; SuzAnne

A. Darlington (14) p.1; Ann Geerhar (29) p.1.

22See, e.g., Ardis W. Koester (12) p.1; University

of Kentucky College of Agriculture (15) p.1; Center

for Neighborhood Technology (59) pp. 2–3.

23 Drycleaners Environmental Legislative Fund

(65) p.2.

24See, e.g., OshKosh B’Gosh, Inc. (27) p.2; VF

Corp. (36) p. 5; see also Fieldcrest Cannon (11) p.

4 (opposed suggested amendment but advanced the

same reasoning as the preceding commenters);

American Textile Manufacturers Institute (56) pp.5–

6.

25Aqua Clean System (20) pp. 4–6; Mothers &

Others (22) pp. 2–3; The Massachusetts Toxics Use

Reduction Institute (23) pp. 1–2; Ecofranchising,

Inc. (28) p. 3; Public Advocate for the City of New

York (39) pp. 8, 73; Friends of the Earth (43) p. 1,

Jo Ann Pullen (44) p. 7; Greenpeace (45) pp. 1–3;

Association of Home Appliance Manufacturers (53)

p. 2, Center for Neighborhood Technology (59) pp.

2–4; EPA (73) p. 1. See also American Apparel

Manufacturers Association (68) p. 5.

26Aqua Clean (20) p. 7; Ecofranchising (28) pp.

2, 4.

27Fieldcrest Cannon (11) p. 4; Woolrich, Inc. (21)

p. 1; OshKosh B’Gosh, Inc. (27) p. 2; VF Corp. (36)

p. 5, Industry Canada (37) p. 3; The GAP, Inc. (78)

p. 5.

28See, e.g., Mothers & Others (22) pp. 1–2; Public

Advocate for the City of New York (39)

(transmitting the comprehensive report on ‘‘The

Risk to New Yorkers from Drycleaning Emissions

and What Can Be Done About It’’); Greenpeace (45)

pp. 1–3, Attachment: ‘‘Dressed to Kill’’; Center for

Neighborhood Technology (59) pp. 2–3.

garment can be either washed or dry

cleaned.15

(ii) What is the actual incidence of

labeling that fails to include both

washing and dry cleaning instructions?

Few comments responded directly to

this question. One guessed that the

incidence is ‘‘Probably none,’’ reasoning

that, because washing is less expensive

than dry cleaning, it would be

unimaginable for a manufacturer to put

a ‘‘Dry Clean’’ label on a garment that

could be washed.16 Another stated that

it is common practice to label

conservatively (e.g., ‘‘dry clean only’’),17

and a third alleged that there is a wide

variation in adherence to the

requirements of the Rule, especially

among small firms and importers.18 Two

cleaners using wet cleaning technology

contended between them that the

incidence ranged from 40% to 100%

because a ‘‘Professionally Wet Clean’’

instruction is never given on labels for

garments that normally would be dry

cleaned but also could be professionally

wet cleaned.19

(iii) With regard to a garment that can

be either washed or dry cleaned, should

the Commission amend the Rule to

require that care instructions be

provided for both washing and dry

cleaning? Several commenters preferred

that the Rule not be amended in this

regard at all, contending that apparel

manufacturers should be free to select

the best care method based on their own

judgment.20 Some commenters favored,

without extensive analysis, requiring

care instructions for both dry cleaning

and home laundering if neither process

would harm the garment. Most of these

expected that such an amendment

would enable consumers to save the

expense associated with unnecessary

dry cleaning for products that could

safely be laundered at home.21 Others

maintained that a reduction in dry

cleaning would diminish for humans

and the environment those risks that are

associated with the use of PCE.22 One

commenter pointed out that some

consumers may prefer to dry clean

washable garments and that care

instructions should give these

individuals a choice of methods when

both laundering and dry cleaning would

be appropriate.23

Another group of commenters

suggested that the Rule be amended to

require washing instructions for

garments that can be safety laundered as

well as dry cleaned, and to require dry

cleaning instructions solely for those

garments that must only be dry cleaned,

rather than to require that both

instructions be specified for garments

that could withstand both processes.24

These commenters reasoned that,

although many items (cotton underwear

and outerwear, children’s clothing,

wash-and-wear apparel, etc.) could

safely be dry cleaned, it would be

neither necessary nor desirable to do so.

In fact, they contended, a requirement

for dual instructions for such products

would actually result in an increase in

the use of dry cleaning solvents because

manufacturers now exclusively

producing washable (but also dry

cleanable) products would have to

install dry cleaning facilities and

equipment so they could provide a

reasonable basis for the dry cleaning

instruction.

Other commenters suggested that the

Rule be amended to include a

requirement that labels on garments for

which dry cleaning is appropriate

include a ‘‘professionally wet clean’’

instruction in addition to the dry

cleaning instruction.25 These

commenters contended that the

professional wet cleaning process is a

viable alternative to dry cleaning in

most cases, and that the process does

little damage to the environment.

Because wet-cleaning wash formulas are

created to cover categories of fabric

type, two commenters stated that labels

should clearly state the composition of

the fabric or fabrics used so the correct

machine wet-cleaning formula may be

used.26

(iv) What are the costs and benefits,

including environmental benefits, of

such an amendment? Several

commenters opposing the amendment

to require instructions for both washing

and dry cleaning contended that a dual

labeling requirement would result in

increased costs for manufacturers who

would have to test for both methods

instead of only one.27 However, those

who favored amending the Rule in any

of the ways discussed above cited as

benefits the reduced cleaning costs to

consumers, the benefits to human health

and the environment, or, occasionally,

both.

Materials describing methods,

training, and equipment in many of the

comments suggesting a requirement for

a ‘‘Professionally Wet Clean’’

instruction implied that a significant

cost would be incurred by cleaners

wishing to use the new technology. One

comments also concluded that an

amendment to require such an

instruction should be accompanied by a

consumer education effort.28

b. Objectives and Regulatory

Alternatives

The record indicates that PCE is

dangerous to humans and the

environment, and that some consumers

are interested in avoiding the use of PCE

when possible. Through the proposed

amendments to the Rule, discussed

below, the Commission seeks to ensure

that consumers are provided with

information that would allow them the

choice of washing garments when

possible, or having them professionally

wet cleaned. The information about

washability may be important to many

consumers, either for economic or

environmental reasons.

When a garment is labeled ‘‘dry

clean,’’ many consumers may be misled

into believing that the garment cannot

be washed in water; if the garment can

be washed in water, the consumer may
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67105

29A Perdue University survey found that 89.3%

of the 962 respondents indicated that they would

not wash a garment labeled ‘‘dryclean.’’ Staff Report

to the Federal Trade Commission and Proposed

Revised Trade Regulation Rule (16 CFR Part 423)

(May 1978), p. 141. Other surveys showed similar

results. Id. at 142–143.

30The Commission has learned from several

commenters, primarily manufacturers, that

requiring both washing and dry clean labels (a

‘‘dual disclosure’’ amendment) would require a dry

cleaning instruction on virtually all washable items.

According to these commenters, this would

necessitate additional testing expenses for

manufacturers and a resulting increase in PCE use,

to the detriment of human health and the

environment. The Commission has no reason to

believe at this time that it is either unfair or

deceptive for a manufacturer or importer to fail to

reveal that a garment labeled for washing can also

be dry cleaned. The comments also indicate that

most consumers would not want to spend the

additional money necessary to dry clean such

items.

31The Rule currently requires this level of

substantiation for a ‘‘Dry Clean Only’’ instruction.

32 FTC Policy Statement Regarding Advertising

Substantiation, 104 F.T.C. 839 (1984). The

Commission issued this statement to ‘‘reaffirm[]’’ its

commitment under Section 5 of the FTC Act, 15

U.S.C. § 45, to requiring adequate substantiation for

objective advertising claims before they are

disseminated.

incur the unnecessary expense of dry

cleaning the garment.29 If the garment is

labeled ‘‘dry clean’’ when it in fact

could be wet cleaned by a professional

cleaner, the consumer may believe it is

necessary to have the garment dry

cleaned although the consumer would

prefer a cleaning method that is less

damaging to the environment.

The lack of this information can result

in substantial injury to consumers in the

form of unnecessary expense and/or

damage to the environment that the

consumer wishes to avoid. Moreover, it

can be extremely difficult for consumers

to avoid this injury by obtaining the

information about washability of an

item for themselves. While fiber content

can be a guide to washability, other

factors—such as the type of dye or

finish used—can also determine

washability, and consumers have no

way of learning what dyes and finishes

were used and whether they will

survive washing. In addition, it may be

that some garments that traditionally

have been damaged by washing (e.g.,

wool business suits) can be cleaned

without damage by new methods of

professional wet cleaning, but

consumers have no way of determining

for themselves which of the many

garments available to them are now

washable.

Accordingly, the Commission seeks

comment on whether it should amend

the Care Labeling Rule to require a

laundering instruction for all covered

products for which laundering is

appropriate. This amendment would

permit optional dry cleaning

instructions for such washable items,

provided dry cleaning would be an

appropriate alternative cleaning

method.30 The amendment would,

however, require that manufacturers

marketing items with a ‘‘Dry Clean’’

instruction alone be able to substantiate

both that the items could be safely dry

cleaned and that home laundering

would be inappropriate for them.31

The disclosures required by this

proposal would inform consumers

purchasing washable items that the

items could be safely laundered at

home. As noted in the comments, this

would enable consumers to make a

more informed purchasing choice and

provide them with the option of saving

money by laundering at home instead of

incurring the higher expenses of dry

cleaning. In addition, consumers who

are concerned about reducing the use of

PCE will have information about the

‘‘washability’’ of all apparel items they

are considering purchasing. Moreover,

this proposal would not result in the

additional substantiation testing (and

increased PCE use) that the comments

suggested a ‘‘dual disclosure’’

requirement could necessitate, because

a dry cleaning instruction would be

optional, as would the necessary

substantiation to support it.

The Commission also seeks comment

on the feasibility of requiring, for all

covered products bearing a dry cleaning

instruction, the addition of a

professional wet cleaning instruction for

items for which professional wet

cleaning would be appropriate. The

comments indicate that the

comparatively new processes of

professional wet cleaning technologies

are promising alternatives to PCE-based

dry cleaning. However, these comments

do not provide enough information

about professional wet cleaning for the

Commission to assess whether and how

the Rule should address wet cleaning.

Therefore, the Commission seeks

information on the cost of wet cleaning,

the availability of wet cleaning facilities,

and any other information that would

help the Commission determine

whether it should consider amending

the Rule to require, for all covered

products bearing a dry cleaning

instruction, the addition of a

professional wet cleaning instruction for

items for which professional wet

cleaning would be appropriate. The

Commission also seeks comment on the

feasibility of the processes as practical

current alternatives to dry cleaning. In

addition, the Commission seeks

comment on whether fiber identification

should be on a permanent label, as is

currently required for care information,

because this information may be needed

for wet-cleaning processes, and

comment on the costs to manufacturers

of such a requirement.

3. The Reasonable Basis Requirement of

the Rule

a. Background

The rule requires that manufacturers

and importers of textile wearing apparel

possess, prior to sale, a reasonable basis

for the care instructions they provide.

Under the Rule, a reasonable basis must

consist of reliable evidence supporting

the instructions on the label. 16 CFR

423.6(c). Specifically, a reasonable basis

can consist of (1) reliable evidence that

the product was not harmed when

cleaned reasonably often according to

the instructions; (2) reliable evidence

that the product or a fair sample of the

product was harmed when cleaned by

methods warned against on the label; (3)

reliable evidence, like that described in

(1) or (2), for each component part; (4)

reliable evidence that the product or a

fair sample of the product was

successfully tested; (5) reliable evidence

of current technical literature, past

experience, or the industry expertise

supporting the care information on the

label; or (6) other reliable evidence. 16

CFR 423.6(c).

The FRN solicited comment on

whether the Commission should amend

the Rule ‘‘to make clear that a variety of

types of evidence, alone or in

combination, might provide a

reasonable basis [for cleaning

directions] in specific instances,’’ but

that as reflected in the Rule’s original

Statement of Basis and Purpose, the

Rule should not be read to suggest that

the reasonable basis standard

necessarily is met whenever a seller

possesses at least one of the types of

evidence set forth as examples of how

the standard might be satisfied. The

FRN also sought comment on whether

the Commission should clarify in the

Rule that the criteria for determining the

proper level of substantiation that were

recited in the Commission’s Policy

Statement Regarding Advertising

Substantiation,32 apply to care labeling

claims, whether analyzed directly under

Section 5 or under the Rule.

In addition, the Commission

expressed interest in whether particular

types of garments or garment

components might necessitate special

treatment. Question 9 in the FRN asked:

Should the Commission amend the Rule to

specify under what conditions a

manufacturer or importer must possess a

particular type of basis among those listed in
67106 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

33 Drycleaners Environmental Legislative Fund

(65) p.4.

34Evelyn Borrow (4) p.1; Claudia G. Pasche (5)

p.1; Margaret S. Jones (6) p.1; University of

Kentucky College of Agriculture (15) p.1; Aqua

Clean System (20) p.3; Carter’s (24) p.3; Braham

Norwick (25) p.1; Ecofranchising, Inc. (28) pp.3–4;

Jo Ann Pullen (44) pp.2–3; J.C. Penney (70) p.3.

35 VF Corp. (36) p.7; Drycleaners Environmental

Legislative Fund (65) p.4.

36 J.C. Penney (70) p.3.

37Clorox Co. (32); Industry Canada (37); Business

Habits, Inc. (38); Jo Ann Pullen (44); Salant Corp.

(52); Association of Home Appliance Manufacturers

(53); Center for Neighborhoods Technology (59);

Drycleaners Environmental Legislative Fund (65);

Department of the Air Force (67); American Apparel

Manufacturers Association (68); EPA (73); The Gap,

Inc. (78).

38Baby Togs, Inc. (2); Carter’s (24); OshKosh

B’gosh, Inc. (27); The Warren Featherbone Co. (33);

VF Corp. (36); American Textile Manufacturers

Institute (56); Fruit of the Loom (64).

39E.g., Center for Neighborhood Technology (59)

p.1; Salant Corp. (52) p.2; Drycleaners

Environmental Legislative Fund (65) p.4; Clorox Co.

(32) p.3.

40 Drycleaners Environmental Legislative Fund

(65) p.4. Thus, for example, for garments made

entirely of material with a long history of care, such

as 100% undyed cotton, historical knowledge may

be sufficient to constitute a reasonable basis. In

contrast, when the garment is made of a new fiber

and is dyed with a new dye or when the garment

is a cotton garment with a bright trim, a

manufacturer may be required to conduct multiple

tests on various samples of the garment in order to

establish a reasonable basis.

41 Drycleaners Environmental Legislative Fund

pointed out that a trim might not noticeably bleed

when cleaned by itself but might bleed onto the

body of a garment when the finished garment is

cleaned. Thus, it would not suffice to have one

‘‘reasonable basis’’ for the body of a garment and

another for the trim. Comment 65, p.4.

42 Industry Canada (37) p.2.

43 In the Statement, the Commission set forth

criteria to consider in establishing the minimum

required basis for objective advertising claims,

where no specific basis was stated or implied:

‘‘These factors include: the type of claim, the

product, the consequences of a false claim, the

benefits of a truthful claim, the cost of developing

substantiation for the claim, and the amount of

substantiation experts in the field believe is

reasonable.’’ FTC Policy Statement Regarding

Advertising Substantiation, 104 F.T.C. 839, 840

(1984).

§ 423.6(c) of the Rule, such as test results?

Should the ‘‘reasonable basis’’ requirements

of the Rule be modified in any other way?

The comments responding to these

portions of the FRN suggest that some

care labels may lack a reasonable basis.

One commenter stated that inaccurate

care labels were responsible for 33–45%

of the damaged garments sent in to the

International Fabricare Institute for

testing during a 1988–1993 period.33

Furthermore, many of the commenters’

responses to Question 10 in the FRN

(‘‘Are there garments in the marketplace

that contain inaccurate or incomplete

care instructions?’’) indicate that many

garments are labeled ‘‘dry clean only’’

without a reasonable basis for warning

that they cannot be washed.34 The

comments additionally suggest that care

instructions may not be appropriate for

all components of a garment, such as

trims.35 Colorfastness and shrinkage

were also identified as problems

experienced with inaccurate or

incomplete care instructions.36

Twelve commenters stated that they

were in favor of modifying the

reasonable basis portion of the Rule,

suggesting that the reasonable basis

requirement should be clarified and

strengthened to reduce the problem of

inaccurate and incomplete care labels.37

Seven commenters were opposed to

modifying the reasonable basis

requirements of the Rule.38 These

commenters expressed concern, for

example, that requiring tests would be

too expensive and would ultimately

increase costs for consumers.

Several commenters recommended

clarifying the Rule by specifying the

circumstances in which a manufacturer

or importer must possess test results or

another specific type of evidence to

establish a reasonable basis.39 One

commenter said that testing might not

always be required and suggested that

the Rule should specify different types

of required evidence for different

circumstances.40 This commenter

stressed, however, that the Rule should

require a reasonable basis for a garment

in its finished state, noting that the

current Rule suggests that it is

satisfactory to have reliable evidence

‘‘for each component part’’ of a

garment.41 Another Commenter

suggested that the Rule should set out

performance standards for certain

properties of garments (e.g.,

dimensional stability and colorfastness)

and should identify both testing

methodologies and evaluation criteria

for those properties.42

b. Objectives and Regulatory

Alternatives

The Commission appreciates the

comments submitted on the FRN and

continues to explore this area. The

Commission seeks comment on the

incidence of inaccurate and incomplete

labels, the extent to which that

incidence might be reduced by

clarifying the reasonable basis standard,

and the costs and benefits of such a

clarification. Section 423.6(c)(3) of the

Rule provides that a reasonable basis

may consist of reliable evidence that

‘‘each component’’ of the garment can

be cleaned according to the care

instructions. As several commenters

pointed out, however, a garment

component that may be cleaned

satisfactorily by itself might not be

cleaned satisfactorily when cleaned as

part of an assembled garment made of

different components, for example, by

bleeding noticeably onto the other parts

of the garment. The Commission,

therefore, seeks comment on whether to

amend the Rule to specify that the

reasonable basis requirement applies to

the garment in its entirety rather than to

each of its individual components.

If the Commission decides to amend

the reasonable basis standard, one

option is to indicate in the Rule that

whether one or more of the types of

evidence described in Section 423.6(c)

constitutes a reasonable basis for care

labeling instructions depends on the

factors set forth in the FTC Policy

Statement Regarding Advertising

Substantiation.43 Another option, as

reflected in Question 9 of the FRN, is to

require in the Rule that cleaning

directions for certain garments, fabrics

or materials will comply with the Rule

only if they are supported by the results

of appropriately designed and

conducted scientific tests recognized by

experts in the field as probative of

whether the item can be cleaned as

directed without damage. The

Commission also seeks comment on

whether, if testing is required under

certain circumstances, the Rule should

specify particular testing methodologies

to be used.

Finally, the Commission solicits

comment on whether the Rule should

set forth standards for acceptable and

unacceptable changes in garments

following cleaning as directed. The

Commission also seeks comment on

whether it would be useful for the Rule

to specify properties, such as

dimensional stability and colorfastness,

to which such standards would apply.

Part C—Request for Comments

Members of the public are invited to

comment on any issues or concerns they

believe are relevant or appropriate to the

Commission’s consideration of

proposed amendments to the Care

Labeling Rule. The Commission

requests that factual data upon which

the comments are based be submitted

with the comments. In addition to the

issues raised above, the Commission

solicits public comment on the specific

questions identified below. These

questions are designed to assist the

public and should not be construed as

a limitation on the issues on which

public comment may be submitted.

Questions

A. Definitions of Water Temperatures in

the Appendix

(1) Is it feasible and desirable to use

the words ‘‘lukewarm’’ or ‘‘cool’’ on a

care label rather than ‘‘cold’’? Should
Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules 67107

these terms be required instead of the

word ‘‘cold’’? What benefits would

consumers derive from such a change?

(2) Is it feasible and desirable to

amend the Rule to require that the

highest acceptable temperature for

‘‘cold’’ water be stated on the care label?

What benefits would consumers derive

from such an amendment? What costs

would such an amendment impose on

manufacturers?

(3) Should the Rule’s definition of

‘‘warm’’ water be amended, and if so,

what temperature should be specified

instead? What benefits would

consumers derive from such an

amendment?

(4) Should the Rule’s definition of

‘‘hot’’ water be amended, and if so, what

temperature should be specified

instead? What benefits would

consumers derive from such an

amendment?

B. Environmental Issues

(1) Please describe the process, or the

processes, commonly referred to as

‘‘Wet Cleaning,’’ ‘‘Multiprocess Wet

Cleaning,’’ ‘‘Professional Wet Cleaning,’’

or other similar terms, and provide as

much technical detail as possible.

(2) What equipment and what

materials are necessary for a

professional cleaning establishment to

employ the wet cleaning processes?

(3) What effects do the materials used

in the wet cleaning process have on

human beings, animals, plants, and the

environment? Please be as specific as

possible.

(4) How many domestic businesses

provide professional wet cleaning to the

public on a regular basis? Please specify

the type(s) of professional wet cleaning

provided. Does the service comprise all,

or a part of, each such company’s

business? If part, what percentage?

(5) What percentage of garments and

other items for which professional dry

cleaning has historically been the only

appropriate cleaning method are safely

and satisfactorily cleanable by

professional wet cleaning? Please be as

specific as possible as to fiber, fabric,

and garment type. What difference, if

any, would there be in customer

satisfaction between the results of the

two processes?

(6) What is the average cost, for as

many items as respondents can

reasonably describe, of professional wet

cleaning compared to professional dry

cleaning? The Commission requests

information both as it pertains to the

cost to the cleaner providing the service

and the cost to the consumer using it.

(7) With regard to a garment that

cannot be home laundered but can be

dry cleaned, should the Commission

amend the Rule to require a professional

wet cleaning instruction too (provided

wet cleaning is appropriate for the

garment)? What would be the benefits

and costs to consumers and

manufacturers of such an amendment?

(8) Should fiber identification be on a

permanent label? Should fiber

identification be on the same label as

care information? What costs would

such requirements impose on

manufacturers?

(9) How many garments currently

labeled ‘‘dry clean’’ or ‘‘dry clean only’’

could be washed at home by

consumers? Should the Rule be

amended to require a laundering

instruction for all covered products for

which laundering is appropriate? What

would be the benefits and costs to

consumers and manufacturers of such

an amendment?

C. The Reasonable Basis Requirement of

the Rule

(1) Are care label instructions

generally accurate? If not, in what ways

are they inaccurate, and do these

inaccuracies result in damage to the

affected garments or other costs to

consumers?

(2) Are any types of garments or piece

goods particularly prone to damage even

when the care label instructions are

followed?

(3) Are home laundering directions on

care labels incomplete or inaccurate in

ways that result in damage to garments

when they are laundered as directed? If

so, what are the most common

problems, and how widespread are

they?

(4) Are dry cleaning directions on care

labels incomplete or inaccurate in ways

that result in damage to garments when

they are dry cleaned as directed? If so,

what are the most common problems,

and how widespread are they?

(5) What actions, if any, do garment

or piece goods manufacturers ordinarily

take to assure that care labels are

accurate? To what extent do garment

manufacturers rely solely on care

information provided by the suppliers

of components of garments?

(6) Do garment manufacturers

typically analyze or test garments for

appropriate cleaning procedures in their

completed form or before the garments’

components are assembled?

(7) In what situations, if any, should

the testing of garments be the only

evidence that would be legally

acceptable?

(8) Should the Rule specify testing

methodologies to be used in situations

in which testing would be required?

What should those methodologies be?

(9) Should the Rule refer to

performance standards for certain

properties of garments? If so, which

properties, and what should these

performance standards be?

(10) What steps, if any, do garment

manufacturers take to provide cleaning

instructions for products comprising

more than one fabric or material, such

as those with metallic trim or trim of a

fabric or color different from that of the

main part of the product?

(11) What evidence is there

concerning the effectiveness of current

actions by garment manufacturers to

ensure appropriate cleaning of their

products?

(12) Do garment labels stating, for

example, that particular cleaning

instructions apply to the garment

‘‘exclusive of trim’’ provide sufficient

guidance to consumers or cleaners to

enable them to avoid damaging the

garments by improper cleaning?

(13) Should the Rule be amended to

delete Section 423.6(c)(3), which

provides that a reasonable basis can

consist of reliable evidence that each

component of the garment can be

cleaned according to the care

instructions and to state, instead, that a

manufacturer must possess a reasonable

basis for the garment as a whole?

(14) Should the Rule be amended to

clarify that whether one or more of the

types of evidence described in Section

423.6(c) constitutes a reasonable basis is

based on the factors set forth in the FTC

Policy Statement Regulating Advertising

Substantiation?

(15) Do garment or piece goods

manufacturers or retailers offer refunds

for products damaged in cleaning

despite adherence to care label

directions? What is the typical refund

policy? How is the existence of such

refunds made known to consumers?

(16) What are the costs to consumers

of complaining to manufacturers or

retailers about garments damaged in

cleaning? Are there factors that

discourage consumers whose garments

have been damaged in cleaning from

complaining to manufacturers or

retailers?

(17) What would be the benefits and

costs to consumers and manufacturers

of these amendments clarifying the

Rule’s reasonable basis requirement?

Authority: Section 18(d)(2)(B) of the

Federal Trade Commission Act, 15 U.S.C.

57a(d)(2)(B).
67108 Federal Register / Vol. 60, No. 249 / Thursday, December 28, 1995 / Proposed Rules

List of Subjects in 16 CFR Part 423

Care labeling of textile wearing

apparel and certain piece goods; Trade

Practices.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 95–31411 Filed 12–27–95; 8:45 am]

BILLING CODE 6750–01–M

RAILROAD RETIREMENT BOARD

20 CFR Part 255

RIN 3220–AA44

Recovery of Overpayments

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

SUMMARY: The Railroad Retirement

Board (Board) revises part 255 of its

regulations, currently entitled

‘‘Recovery of Erroneous Payments’’, to

clarify and update its regulations with

respect to recovery of overpayments.

The revisions more clearly identify the

individuals from whom recovery may be

sought and under what circumstances

recovery of an overpayment of benefits

will be made. The revisions also cover

the circumstances under which such

recovery may be waived, and the

circumstances under which such

recovery may be terminated or

suspended under the Board’s authority

concerning administrative relief from

recovery.

DATES: Comments must be received by

January 29, 1996.

ADDRESSES: Secretary to the Board,

Railroad Retirement Board, 844 Rush

Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Sadler, Assistant General

Counsel, Railroad Retirement Board,

844 Rush Street, Chicago, Illinois 60611,

(312) 751–4513, TDD (312) 751–4701).

SUPPLEMENTARY INFORMATION: Part 255 of

the Board’s regulations has not been

revised since 1967. Although section 10

of the Railroad Retirement Act of 1974

(45 U.S.C. 231i) includes provisions for

recovery and waiver of overpayments of

benefits which are substantially the

same provisions included in the

Railroad Retirement Act of 1937 (45

U.S.C. 228i, superseded), internal

procedures dealing with overpayments

of benefits have been developed which

should properly be included in the

regulations of the Board. In addition, in

the Board’s view, waiver should not be

available with respect to certain types of

overpayments and this proposed rule

reflects those proosals. Because the

proposed rule would make extensive

changes in the existing regulation, a

section-by-section analysis is provided

below.

The title of part 255 is proposed to be

revised to ‘‘Recovery of Overpayments’’.

The current title, ‘‘Recovery of

Erroneous Payments’’, mistakenly

implied that all such payments were

caused by ‘‘fault’’. Overpayments can

and do occur through no fault of the

recipients of such payments. The

purpose of part 255 is to set out

regulations to govern those instances

where more than the correct amount of

benefits has been paid, regardless of

whether or not ‘‘fault’’ exists.

Section 255.1 would replace the

present § 255.1, which sets out statutory

provisions, with an introductory

statement to summarize what is

included in part 255.

Section 255.2 defines ‘‘overpayment’’

using essentially the same language that

is used in the current § 255.2 to define

‘‘erroneous payments’’.

Section 255.3 states the general rule

that overpayments shall be recovered in

all cases except where recovery is

waived under § 255.10 or administrative

relief from recovery is granted under

§ 255.17 or where collection is

suspended or terminated under these

regulations or the Federal Claims

Collection Standards.

Section 255.4 would replace the

current § 255.4, which simply states in

a summary manner the methods by

which erroneous payments may be

recovered, with a detailed description of

those individuals from whom

overpayments may be recovered.

Section 255.5–255.8 set out the

methods by which an overpayment of

benefits may be recovered. These

methods include recovery by cash

payment (§ 255.5), recovery by setoff

from any subsequent payment

determined to be payable on the basis of

the same record of compensation

(§ 255.6), recovery by deduction in the

computation of a residual lump-sum

death benefit payable under the

Railroad Retirement Act (§ 255.7), and

recovery by actuarial adjustment of an

annuity (§ 255.8). These sections are

substantially similar to the current

§§ 255.5–255.8. However, § 255.8,

unlike the current section, provides that

an actuarial adjustment is not effective

until the overpaid annuitant negotiates

the first check which reflects the

actuarially adjusted rate.

Section 255.9 provides that where

recovery of an overpayment is by setoff

which can be effected within 5 months

and the individual from whom recovery

is sought is an enrollee under Medicare

Part B, the individual’s monthly

Medicare premium will be paid and the

balance of the annuity amount will be

applied toward recovery of the

overpayment. This section is new and is

intended both to save the agency the

administrative costs of billing an

annuitant for his or her Part B Medicare

premium where his or her annuity

would be offset in its entirety to recover

an overpayment and also to avoid lapse

of Medicare coverage.

Section 255.10 sets out the general

requirements for waiver of recovery of

an overpayment as set forth in the

Railroad Retirement Act and replaces

the present §§ 255.10 and 255.11.

Section 255.11, as currently in effect,

would be removed because it is

redundant. The new section 255.11

would define ‘‘fault’’ and gives

examples of when an individual is or is

not at fault based upon past agency

decisions. Section 255.12 defines when

recovery is contrary to the purpose of

the Railroad Retirement Act, based upon

past agency decisions. Section 255.13

defines when recovery is against equity

or good conscience. Each of these

sections is new and together they

expand on the present § 255.12.

Sections 255.14, 255.15, and 255.16

are new sections which describe special

situations where waiver of recovery of

an overpayment is not available.

Specifically, § 255.14 provides that

waiver is not available under certain

circumstances when recovery can be

made from an accrual of social security

benefits. Section 255.15 provides that

waiver is not available to the estate of

an individual.

Section 225.16 would provide that

recovery of a small overpayment of less

than $500 will never be considered

contrary to the purpose of the Railroad

Retirement Act or against equity or good

conscience. Under this rule, waiver of

recovery would not be applicable for

debts under $500. This proposed rule is

similar to the rule contained in

§ 340.10(e)(2) of the Board’s regulations

with respect to recovery of

overpayments under the Railroad

Unemployment Insurance Act (20 CFR

340.10(e)(2)).

Section 255.17 sets out internal Board

policy governing those situations where

recovery of an overpayment may not be

waived under section 10(c) of the

Railroad Retirement Act, thus

extinguishing the debt, but where

recovery will not be sought for equitable

reasons. The regulations do not

currently contain such a provision.

Section 255.18 is new and explains

how an overpayment is recovered when

that overpayment was made to a

representative payee under part 266 of

this chapter.