19818 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

1The Commission voted 2–1 to issue this rule.

Chairman Ann Brown and Commissioner Thomas

H. Moore voted in the majority. Commissioner Mary

Sheila Gall voted in the minority. Each

commissioner issued a separate statement

concerning this vote. Copies of the statements can

be obtained from the Commission’s Office of the

Secretary, Washington, DC 20207, telephone (301)

504–0800.

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 71 as follows:

PART 71—[AMENDED]

1. The authority citation for 14 CFR

part 71 continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389; 14 CFR 11.69.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of Federal Aviation

Administration Order 7400.9C, Airspace

Designations and Reporting Points,

dated August 17, 1995 and effective

September 16, 1995, is amended as

follows:

Paragraph 6005 Class E airspace areas

extending upward from 700 feet or more

above the surface of the earth.

* * * * *

AEA VA E5 Richlands, VA [New]

Tazewell County Airport, VA

(Lat. 37°03′49′′ N, Long. 81°47′54′′ W)

That airspace extending upward from 700

feet above the surface within a 6-mile radius

of Tazewell County Airport.

* * * * *

Issued in Jamaica, New York on April 10,

1996.

John S. Walker,

Manager, Air Traffic Division, Eastern Region.

[FR Doc. 96–11024 Filed 5–2–96; 8:45 am]

BILLING CODE 4910–13–M

CONSUMER PRODUCT SAFETY

COMMISSION

16 CFR Part 1500

Requirements for Labeling of Retail

Containers of Charcoal

AGENCY: Consumer Product Safety

Commission.

ACTION: Final rule.

SUMMARY: Under the Federal Hazardous

Substances Act, the Commission issues

a rule to change the required labeling for

retail containers of charcoal intended

for cooking or heating. The labeling

addresses the potentially lethal carbon

monoxide hazard associated with

burning charcoal in confined spaces.

The amendments, which include a

pictogram, make the label more

noticeable and more easily read and

understood and increase the label’s

ability to motivate consumers to avoid

burning charcoal in homes, tents, or

vehicles.

DATES: The amended rule becomes

effective November 3, 1997.1

FOR FURTHER INFORMATION CONTACT:

Mary Toro, Division of Regulatory

Management, Office of Compliance,

Consumer Product Safety Commission,

Washington, D.C. 20207; telephone

(301)504–0400 ext. 1378. Copies of

documents relating to this rulemaking

may be obtained from the Office of the

Secretary, Washington, DC 20207,

telephone (301)504–0800.

SUPPLEMENTARY INFORMATION:

A. Background

1. Relevant Statutes and Regulations.

Since its creation in 1973, the Consumer

Product Safety Commission

(‘‘Commission’’ or ‘‘CPSC’’ has

administered the Federal Hazardous

Substances Act (‘‘FHSA’’), 15 U.S.C.

1261–1278. Prior to that time, the FHSA

was administered by the Food and Drug

Administration (‘‘FDA’’).

The FHSA defines ‘‘hazardous

substance’’ as including any ‘‘substance

or mixture of substances which (i) is

toxic * * * if [it] may cause substantial

personal injury or substantial illness

during or as a proximate result of any

customary or reasonably foreseeable

handling or use * * *.’’ Section

2(f)(1)(A) of the FHSA, 15 U.S.C.

1261(f)(1)(A). Hazardous substances are

misbranded if they do not bear the

labeling required by section 2(p)(1) of

the FHSA, 15 U.S.C. 1261(p)(1).

Section 3(b) of the FHSA, 15 U.S.C.

1262(b), authorizes the Commission to

issue regulations establishing variations

from or additions to the labeling

required under section 2(p)(1) if the

Commission finds that the requirements

of section 2(p)(1) are not adequate for

the protection of the public health and

safety in view of the special hazard

presented by any particular hazardous

substance. Rulemaking under section

3(b) is conducted under the informal

notice and comment procedure

provided in 5 U.S.C. 553.

In addition, section 3(a) of the FHSA,

15 U.S.C. 1262(a), authorizes the

Commission to issue regulations

declaring products to be hazardous

substances if the Commission finds they

meet the definition of hazardous

substance in section 2(f)(1)(A). The

purpose of this authority is to avoid or

resolve uncertainty as to the application

of the FHSA. 15 U.S.C. 1262(a).

In 1971, the Food and Drug

Administration (‘‘FDA’’) issued a rule

under section 3(a) of the FHSA to

declare charcoal in containers for retail

sale and intended for cooking or heating

to be a hazardous substance. 36 FR

14,729 (August 11, 1971); 21 CFR

§ 191.5. At the same time, FDA issued

a rule under section 3(b) of the FHSA

to require a statement on such packages

of charcoal that would warn of the

potentially deadly hazard of CO

poisoning from charcoal when used in

a confined area. Id. at § 191.7. These

rules are currently codified at 16 CFR

§§ 1500.12(a)(1) and 1500.14(b)(6),

respectively. The currently required

label is as follows:

BILLING CODE 6355–01–P
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19819

2Numbers in brackets indicate the number of a

document as listed in the List of Relevant

Documents in Appendix 1 to this notice.

3As noted above, CO is produced as a product of

incomplete combustion. The term ‘‘non-fire’’ means

that the CO was not produced by a conflagration or

other unintended combustion.

BILLING CODE 6355–01–C

The current label is required to appear

on both the front and back panels of

bags of charcoal, in the upper 25% of

the panels, at least 2 inches below the

seam, at least 1 inch above any other

reading material or design element of

the bag, and in specified minimum type

sizes.

2. Nature of the hazard. [6, Tab B] 2

CO is produced by the incomplete

combustion of fuels such as charcoal.

The level of CO produced from burning

charcoal may accumulate to toxic levels

in closed environments. CO is a

colorless, odorless gas which reduces

the blood’s ability to carry oxygen by

reacting with hemoglobin to form

carboxyhemoglobin (COHb).

Individuals’ reactions to CO exposure

vary depending on several factors,

including age, health status, and

smoking habits. Due to the nonspecific

symptoms that can be associated with

CO poisoning (e.g., fatigue, lethargy,

dizziness, diarrhea, or nausea),

misdiagnoses of both acute and chronic

CO poisonings can be expected.

Additionally, CO is odorless, which

may contribute to individuals frequently

being unaware of their exposure to CO.

High levels of COHb in the blood can

cause death.

3. Petition from Barbara Mauk. On

October 12, 1990, CPSC received a letter

from Barbara Mauk petitioning the

Commission to amend the current label

on bags of charcoal. [1] In this letter, the

petitioner described an incident that

occurred when she and her son were

camping 1 year previously. Her son died

from CO poisoning, and she was

hospitalized and treated for CO

poisoning, after she brought a still-warm

charcoal grill inside her camper. The

petition (No. HP 91–1) requested that

the current label on bags of charcoal be

revised to state that: (1) charcoal

produces CO (and, if applicable, other

lethal or toxic fumes), (2) charcoal

produces fumes until the charcoal is

completely extinguished, and (3) CO has

no odor.

On December 22, 1992, the

Commission voted to grant the petition

as to the statements that charcoal

produces CO and that CO has no odor,

and to deny the petition as to adding

statements that charcoal produces these

fumes until the charcoal is completely

extinguished. [2] The Commission also

voted to improve the label’s

precautionary language, specifically

with reference to ventilation. In this

regard, it was thought that the current

label’s statement that charcoal should

not be used for indoor cooking or

heating unless ventilation is provided is

dangerously misleading. Consumers

may assume erroneously that measures

such as opening a door or cracking a

window would provide adequate

ventilation. Further, consumers are

unlikely to be able to supply the exhaust

hoods, ducting, and powerful positive

exhaust fans that are needed to provide

adequate ventilation.

4. Subsequent actions by the

Commission. In 1993, the Commission’s

staff became aware of data that

indicated that a pictogram is needed to

communicate the safety message to

those who do not read English. [6, Tab

E(1)] Further, an article, discussed

below in section B of this notice,

reported that 73% of the victims in one

area over an 11-year period were

members of ethnic minorities, many of

whom were Hispanic or Asian

immigrants who could not speak

English. [3]

On April 22, 1994, the staff met with

members of the charcoal industry to

present the staff’s recommendations for

revising the warning label. Industry

members indicated a willingness to

revise the warning label, but raised a

number of concerns. [6, Tab F] These

concerns were considered in further

developing the label.

On June 1, 1994, the Commission

directed the staff to prepare, for the

Commission’s consideration, a draft

notice of proposed rulemaking (‘‘NPR’’)

to amend the labeling currently required

for packages of charcoal to warn of the

dangers of burning charcoal indoors.

The label to be developed by the staff

would: (1) clarify the dangers of burning

charcoal indoors; (2) remove the

possibly misleading statement that

implies that charcoal can be safely

burned indoors with ‘‘ventilation;’’ (3)

add color to the signal word panel; (4)

include a pictogram, if feasible; (5)

include a Spanish safety message if a

pictogram is not feasible; and (6)

include additional features

recommended by the staff to make the

safety messages more conspicuous and

understandable.

On April 13, 1995, staff met with

industry members again to present the

results of pictogram tests and staff’s

recommendations for revising the

warning label on packages of charcoal.

[6, Tab F] The changes to the

recommended warning label reflected,

for the most part, concerns industry

representatives raised at the April 1994

meeting. After considering the

comments made at the April 1995

meeting, the staff recommended a

revised label to the Commission. The

staff also described possible variations

of that label for the Commission’s

consideration. The proposed label, and

the main reasons that various features of

the label were chosen, are described in

section D of this notice. The proposed

rule was published in the Federal

Register on August 10, 1995, with a

request for public comments, to be

submitted no later than October 24,

1995. 60 FR 40785. The comments

received on the proposal, and the

Commission’s responses to the

comments, are described below in

Section E of this notice.

B. CO Poisoning Incidents

The Commission’s Division of Hazard

Analysis examined available data

concerning CO poisoning incidents.

That Division estimates that there was

an average of about 28 non-fire COrelated deaths per year associated with

charcoal grills and hibachis from 1986

to 1992.3 (The annual estimate of nonfire CO deaths fluctuates, with no

discernible pattern. The estimates

ranged from 20 in 1987 and 1990 to 38

in 1992.)

Data from the CPSC’s National

Electronic Injury Surveillance System

(‘‘NEISS’’) indicate that there was an

average of about 300 emergency-roomtreated injuries involving charcoal grills

and hibachis annually from 1991 to

1994. [6, Tab C] After the Commission

considered the proposed rule, the

Commission’s Hazard Analysis staff

reviewed eight additional incident

reports involving CO deaths and injuries

associated with the indoor use of

charcoal. These incidents were for the

years 1994 to the present. [15] The

factors identified in these recent

incidents were very similar to those

previously reported.

There were 14 victims reported in the

additional incidents: 9 died and 5

recovered. Where a victim’s

membership in an ethnic minority was

reported, Hispanics continued to be the

group reported most often. The data

indicated that the Hispanic victims

either spoke little or no English. The

circumstances indicated that the victims

were unaware of the potential lethal

effects of burning charcoal indoors.

Most of the incidents involved a

charcoal grill. Information on the safety

labeling on packages of charcoal was not

available. However, the Commission’s

Office of Compliance has no record of

opening a case based on a violation of

the charcoal special labeling
19820 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

requirement, and there is no reason to

believe that the packages of charcoal

involved in these incidents did not bear

labels warning of the CO hazard.

Many of the incidents occurred when

victims burned charcoal in their homes

or in vehicles. Most of the incidents

occurred when victims used charcoal to

keep warm. Most of the incidents

occurred during the fall and winter.

An article by Hampson, N.B. et al.

(1994), reports that 79 victims were

treated for CO poisoning resulting from

burning charcoal indoors in the Seattle,

Washington, area between October 1982

and October 1993. [3] Fifty-eight (73%)

of the victims were members of ethnic

minorities, many of whom were

Hispanic or Asian immigrants who

could not speak English. [3] There was

no information available, however,

documenting whether they could read

English.

C. The Pictogram

The CPSC staff, a charcoal

manufacturer, and Dr. Neil B. Hampson

of Washington State each developed a

pictogram. [6, Tab E(2)] Each pictogram

was tested according to ANSI Z535.3,

American National Standard for Criteria

for Safety Symbols. The pictogram

developed by CPSC staff obtained the

highest percentage of correct responses

in the first round of testing. This

pictogram achieved 56% correct

responses, with 4% critical confusion.

(Critical confusion is where the message

conveyed is the opposite of the intended

message.) Based on findings from the

test results, the three pictograms were

revised and presented for a second

round of testing. The revised pictogram

developed by a charcoal manufacturer

obtained the highest percentage of

correct responses in this round of

testing (74% correct responses, with no

critical confusion).

The ANSI Z535.3 test method

recommends that, to be selected, a

pictogram should either obtain 85%

correct responses with no more than 5%

critical confusion or be paired with

other features, such as a verbal message.

[10] For the reasons discussed below in

responding to comments on the

proposal, the Commission concludes

that it is appropriate to use the

pictogram that scored highest in the

tests described above.

D. The Proposed Label

The Commission’s Human Factors

staff concluded that, as a matter of

optimum label design, it would be

desirable for the label to be consistent

with the ANSI Z535.4, American

National Standard for Product Safety

Signs and Labels. [6, Tab E(1)] In

meetings before the Commission

considered the proposal, however, the

industry pointed out that this optimum

label would require the bag to have a

minimum of four colors: red, orange,

black, and white. The industry stated

that many of the printing presses for

charcoal bags have the capability of

printing only six colors, and that presses

capable of printing more than six colors

are very expensive. Generally, most bags

already have at least six colors, and the

presently-used colors often do not

include one or more of the colors that

would be required by the ‘‘optimum’’

label described above. Industry

members stated that customers may

consider the color scheme of a product

to be part of its brand identification.

For the reasons given by the industry,

the Commission proposed a label that

did not use the colors specified by

ANSI, but will still be conspicuous. [13]

Thus, the revised label will not change

the present requirement that the label

shall be in a ‘‘color sharply contrasting

with the background’’ and that the

borderline shall be ‘‘heavy.’’ Examples

of color combinations that the

Commission’s staff considers to be

sharply contrasting, in order of expected

visual efficiency, are: black on white;

black on yellow; white on black; dark

blue on white; white on dark red, green,

or brown; black on orange; dark green

and red on white; white on dark gray;

and black on light gray. [9] Examples of

colors that may not be considered

sharply contrasting are: black on dark

blue or dark green, dark red on light red,

light red on reflective silver, and white

on light gray or tan. See 16 CFR

1500.121(d).

To make the label easier to read and

understand, the Commission proposed

that the messages be presented

concisely and in an outline form, be

presented in a horizontal format, be leftjustified with a ragged right margin, be

in upper and lower case lettering, be in

the appropriate point-type, have an

acceptable strokewidth-to-height ratio,

and have sufficient space between lines

of text. [6, Tab E(1)]

When the minimum specified type

sizes are laid out in the configuration

specified in the revised label, the label

is 2 inches high. The revised label is

taller than the currently required label.

The current label also is required to be

at least 2 inches from the top seam. If

this required distance were to remain

the same, the bottom edge of the taller

revised label would have to be lower on

the bag. This could interfere with

existing graphics, which would then

have to be redesigned. This could

require additional modifications to

printing plates and increase the cost of

the label revision, without providing

any identifiable safety benefit.

Therefore, the Commission proposed to

change the minimum allowable distance

from the top seam to the label from 2

inches to 1 inch. This would allow the

taller label to be printed without

affecting other printing lower on the

bag.

The Commission proposed to retain

the current requirements that the label

must be on both the front and back

panels of the bag and in the upper

quarter of the panels.

For the reasons stated above and

elsewhere in this notice, the

Commission is revising the label

required on packages of charcoal to

appear and read as follows:

BILLING CODE 6355–01–P
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19821

BILLING CODE 6355–01–C

E. Comments on the Proposal

The Commission received seven

comments in response to the notice of

proposed rulemaking. The issues raised

by the comments are summarized

below, along with the Commission’s

responses.

Issue: Pictogram

Comment: Slash vs. ‘‘X.’’ Several

commenters addressed the use in the

proposed revised label of an ‘‘X’’

overlaying the pictogram to indicate that

the actions depicted in the pictogram

are prohibited. A commenter argued

that this aspect of the pictogram is not

consistent with any international

standard or to ANSI Z535.3 ‘‘Criteria for

Safety Symbols,’’ in which prohibited

actions are characterized by a single

slash in a circle. Another commenter

stated that a single slash ending at the

edges of the circle across three separate

pictograms for each at risk location may

be more universally recognized and

effective than an X. The commenter

believed this would be more in line

with global marketing standards. This

commenter noted that the pictogram

was tested using a population largely

made up of Hispanics, and questions

whether the same results would have

been obtained with other ethnic groups.

Response: The Commission’s Human

Factors staff conducted a two-phase

study to determine which pictogram

most clearly conveyed the safety

message to the at-risk population. Three

pictograms were tested in the first

phase, all of which incorporated a circle

with the ANSI-recommended diagonal

slash through the image. The most

effective pictogram was understood by

only 56% of the subjects, with 4%

critical confusion. (Critical confusion

means that the subjects’ response was

the opposite of the correct response.)

The test subjects’ responses during

the test sessions and debriefing revealed

that some of the subjects thought that

the slash applied to only those items in

the circle that actually intersected with

the slash. Other subjects did not

understand that the slash was a

prohibition symbol. Subjects

recommended the use of an ‘‘X’’ to

better communicate the prohibition

message. Although the slash is

commonly used to communicate the

message of ‘‘no’’ or ‘‘don’t,’’ it was

clearly not effective with some Latin

American subjects.

Consistent with ANSI Z535.3, the

second round of testing incorporated

design lessons drawn from the results of

the first round of testing. The slash was

replaced by an ‘‘X,’’ and several minor

design changes were made to the

pictograms. The measured

comprehension improved significantly.

Based on the data, Human Factors

concluded that using the ‘‘X’’ in place

of the slash is fully justified because:

1. The highest comprehension score

using a slash was 56% with 4% critical

confusion. All three pictograms tested

in the second round using the ‘‘X’’

scored significantly better than the best

slash pictogram tested in the first round.

The pictogram ultimately selected was

identified correctly by 74% of the test

subjects, with 0% critical confusion.

2. The primary objective for

developing and selecting the pictogram

design was to maximize the

effectiveness of the prohibition message,

to never burn charcoal inside a house,

tent, or vehicle. Effectiveness was

defined and empirically measured by

assessing the explicit understandability

of the pictogram by a sample of at-risk

charcoal users. This is precisely the

primary criterion described in ANSI

Z535.3–1991. Section A.1 of ANSI

Z535.3–1991 states, ‘‘In the following

procedure, the primary criterion for

determining symbol effectiveness is that

of understandability; in other words,

that the symbol clearly conveys the

intended message to the appropriate test

group.’’ Based on the Commission’s

primary objective, to maximize

effectiveness, and ANSI’s endorsement

of that goal, the use of the ‘‘X’’ is

justified.

3. Although ANSI clearly defines the

slash as the preferred design to

designate prohibition, Section 7.4 of

ANSI Z535.3–1991 supports the search

for new and more effective designs.

Section 7.4 endorses this rationale of

flexibility and continuous refinement by

stating ‘‘If a new symbol has been tested

and found to be acceptable, it and the

results of the testing procedure may be

forwarded to the ANSI Z535 Committee

for consideration for inclusion in a

revision of the present standard.’’ The

Commission intends to submit the

results of this work to ANSI so that they

may consider the merits of supporting

alternate symbol designs for ethnic or

other special populations.

The empirically validated pictogram

that was ultimately selected for the new

labeling requirement meets the original

CPSC objective of maximizing

effectiveness and is consistent with the

principles for designing labels specified

in ANSI Z535.3. Regarding the comment

that the label should be universal and

not ethnically sensitive, the label is

designed to be effective for all charcoal

users.

Therefore, the Commission concludes

that the X symbol is a more effective

communicator of the behavior to be

prohibited than is the slash.

Accordingly, no change in the proposed

revised label is warranted in this regard.

Comment: Effectiveness of the

pictogram. Commenters contended that

the pictogram fails to satisfy recognized

standards of effectiveness. The

commenters state that the ANSI

standard requires 85% correct responses

with a maximum of 5% critical

confusion, while the CPSC-proposed

pictogram received 74% correct

responses with no critical confusion.

One company believes that 74% is

significantly different from 85% and

expressed serious concern about a

pictogram which failed recognized
19822 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

standards of effectiveness not by 1 or

2%, but by 11%. The fact that the

proposed pictogram had no critical

confusion, whereas ANSI allows up to

5%, is irrelevant to this commenter.

Response: These commenters are

incorrect in stating that the CPSC-tested

pictogram does not meet the

effectiveness criteria of ANSI.

The particular number of correct

responses obtained in the test of a label

depends on the particular test

methodology used. Therefore, there is

no precise way to define acceptable and

unacceptable scores. ANSI Z535.3,

section A.2.7, states ‘‘A criterion of 85%

correct responses with a maximum of

5% critical confusion is suggested for

acceptance of a given symbol.’’ Section

A.2.7 of ANSI Z535.3, however, states

that symbols which fail to meet the 85%

level should be used with a

supplementary word message, or be

supplemented by specialized training.

Thus, ANSI Z535.3 clearly recognizes

that scores less than 85% may still be

used in certain circumstances.

CPSC’s label incorporates the features

that ANSI recommends for labels

scoring less than 85% correct responses.

Although the pictogram was tested

alone, the recommended label contains

both the pictogram and a written

message. Additionally, the CPSC’s staff

met with the charcoal industry

regarding an information and education

campaign to warn consumers about the

dangers of burning charcoal indoors.

The Human Factors staff chose to use

an experimental methodology that was

extremely rigorous and that therefore

may have biased the measured

comprehension scores downward. This

was done to maximize confidence in the

measured scores, and to minimize

possible criticism about inflating the

scores through using a less stringent

method. The following factors may tend

to lower the percentage of correct

responses in CPSC’s tests compared to

that which might be obtained using

other test methodologies that would also

be acceptable under ANSI Z535.3:

1. ANSI Z535.3 endorses both openended testing and multiple-choice

testing. The Human Factors staff chose

to use open-ended testing as it is the

most demanding assessment process to

measure comprehension. Both ANSI

and the Commission recognize that this

rigorous methodology may negatively

influence scores. ANSI Z535.3, Section

A.2.6, states ‘‘It should be stressed that

different techniques may not give

comparable results.’’

2. The criteria used to select subjects

were strongly biased toward selecting an

at-risk sample. Fifty percent of the

subjects were Hispanics who did not

read English and were at or below the

government standard for poverty. The

remaining half were of no specified

ethnicity who did read English and

were below the median income. No

middle or upper income people were

included in the test. The Human Factors

staff chose to pursue this methodology

in order to assess the pictogram in the

worst-case situation. The objective was

to ensure that the selected pictogram

communicates the hazard to the

populations that are at greatest risk.

More correct responses might have been

obtained if the sample tested had

represented the general population.

3. In order to reduce the possible

learning effect associated with viewing

the pictograms in succession, the

pictograms were presented out of

context, that is, on a white sheet of

paper. They were separated from each

other by pictograms associated with

other hazards. Had the pictograms been

tested in context, on bags of charcoal, it

is likely that higher comprehension

scores would have been obtained. [15,

Tab D(1), Cahill, 1975]

Furthermore, the International

Organization for Standardization

(‘‘ISO’’), issued an international

standard, ISO 9186, Procedures for the

Development and Testing of Public

Information Symbols, that recommends

testing methodologies to evaluate

symbols intended to be used

internationally. These methodologies

are intended to test the common

effectiveness of symbols for populations

of different countries; the tests were not

developed to evaluate labeling in the

U.S. Section 5.5.7 of ISO 9186 states, ‘‘If

the comprehension score * * * exceeds

66%, then this variant may be used to

define the standard image content.’’

Later in the same section, ‘‘For critical

referents (e.g. safety symbols), the 66%

criterion should be rigorously adhered

to.’’ Although ISO 9186 was not

designed specifically to test a label such

as the one at issue here, it does show

that an acceptance criterion for

understandability of less than 74% has

been adopted by a well-known

standards organization.

As noted above, a commenter states

that an effectiveness score of 74% is

significantly different from the 85%

threshold described in the ANSI

standard. The commenter is correct if he

is referring to ‘‘significantly different’’

in a technical statistical sense; the

difference between 74% and 85% in

this test is statistically significant at the

commonly used 95% confidence level.

However, the difference is not

significantly statistically different at a

96% confidence level. [16] More

importantly, for the reasons explained

above, this issue is not central to

whether the CPSC test scores are

adequate.

The commenter also states that

critical confusion is irrelevant. The

Commission disagrees with this

conclusion. An individual who is

critically confused, and thus believes

that the pictogram means that it is

appropriate to burn charcoal indoors,

may be more likely to create the risk of

carbon monoxide poisoning than

someone who merely does not know

what the pictogram means. This

principle is reflected in the ANSI

standard, which states, at Section A.2.7,

‘‘Where several symbols are evaluated

for a given referent, the symbol that both

meets the above criteria, and performs

best in terms of highest percentage of

correct answers and lowest percentage

of critical confusion should be

selected.’’

Comment: Size of the test group. A

commenter contended that the 50-

member test group was too small for this

type of testing. According to the

commenter, a minimum of 100–150

subjects should be used.

Response: The number of test subjects

used by the Commission is consistent

with ANSI Z535.3, which suggests a

minimum of 50 subjects as the ‘‘best

balance between statistical reliability

and ease of testing.’’ [10] Thus, in the

absence of any specific reason why the

information obtained by using 50

subjects is unreliable, the Commission

concludes that an adequate number of

persons were tested.

Comment: Label ‘‘clutter.’’ A

commenter contended that the

pictogram is small and cluttered

compared to the size of the label and

does not conform to an ANSI standard

pictogram format, which depicts one

message icon per enclosed symbol.

Response: The selected pictogram

conforms to the general principles

described in ANSI Z535.3. A pictogram

with only one icon, a house, was tested

in the first round. A number of subjects

did not generalize that pictogram to

include vehicles and tents, which are

extremely dangerous places to use

charcoal improperly. Subjects suggested

including a vehicle and tent to

communicate the message ‘‘Never burn

charcoal inside homes, vehicles, or

tents.’’ The proposed pictogram

includes all three elements. According

to ANSI Z535.3, the intent of the testing

procedure is ‘‘to choose a symbol which

best conveys the message.’’ Thus, the

pictogram selected conforms to the

ANSI testing procedure.

Any perception of ‘‘clutter’’ could be

reduced by making the pictogram larger.

However, this would increase the
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19823

minimum height of the label. The

Commission believes the minimum

allowable label height will effectively

communicate the desired messages. The

Commission is not requiring a larger

label for the reasons propounded by the

industry and discussed below.

For the reasons discussed above, the

Commission concludes that the label

will be sufficiently effective.

Comment: Lack of pictogram

specificity may discourage charcoal use.

A commenter contends that the

pictogram does not identify the danger

associated with charcoal misuse and

does not convey what CO is. The

commenter fears that rather than simply

warning users about the danger of using

charcoal in confined areas, the

pictogram may discourage charcoal

grilling. The commenter also asked what

message was received by the 26% who

did not respond correctly.

Response: Admittedly, a pictogram

may not be a feasible way to explicitly

communicate the invisible hazard of

CO. However, most people will get the

intended concept that they should not

burn charcoal inside homes, vehicles, or

tents, even if they will not learn from

the pictogram alone that the hazard is

CO. This is shown by the 74% rate of

correct responses for the selected

pictogram. Additionally, the pictogram

and the words together convey the

complete message.

The remaining 26% of the subjects,

who did not give correct responses,

either omitted part of the intended

message or completely missed the

concept. However, none of these

subjects were left with the impression

that they should not use charcoal or not

use it for grilling. Thus, there is no

reason to conclude that the pictogram

will cause any reduction in charcoal

sales. The issue of whether the entire

label will cause any reduction in sales

is discussed later in this section.

Issue: Label Proportional to Package

Comment: Keep specified label size as

a minimum only. In the proposal, the

Commission specified a minimum

required size for the label and solicited

comment on whether to require that

bags that are larger than the smallest

bags on the market bear labels that are

larger than the minimum. Two

manufacturers commented that if larger

warning labels are required on larger

bags, artwork lower on the bags may

have to be changed. Therefore, the

commenters recommended that the size

be specified as a minimum, as proposed.

Response: The Commission agrees

that requiring larger labels on larger

bags is likely to increase the cost of the

rule in some cases by requiring

additional changes to the graphics on

the bags. Further, the Commission lacks

data from which to conclude that any

benefits of larger labels on large bags

would justify these increased costs.

Accordingly, the Commission is not

requiring that the size of the required

labeling increase in proportion to the

size of the bag.

Issue: Layout of Label

Comment: Label format. A commenter

stated that CPSC’s proposed label

arrangement does not conform exactly

to ANSI Z535.4 ‘‘Product Safety Signs

and Labels’’ guidelines. The commenter

mentioned that the label should be

divided into two halves, one half being

the pictogram/graphic panel and the

other half being the signal word and

word message panel. Alternatively, the

signal word could be centered above the

pictogram and word message panels.

Response: While ANSI Z535.4

provides an example of a label

configuration as described by the

commenter, ANSI maintains that

‘‘actual * * * layout * * * may vary

depending on application

requirements.’’ [10] The differences

between the label finally adopted and

ANSI’s example were necessary to

accomplish the goals of: making the

type size of the safety messages

consistent, to the extent feasible, with

that currently specified in

§ 1500.14(b)(6); incorporating a legible

pictogram; and not unduly increasing

the height of the label. Accordingly, this

comment provides no basis for changing

or rejecting the revised label.

Issue: Responsibility of Users

Comment: Fault of users. A

commenter asked how many people

involved in the CO events had even

‘‘bothered’’ to read the existing warning

label. The commenter also asked how

many were under the influence of

alcohol or drugs and would not have

seen or paid any attention to a warning

label of any kind.

Response: Information on whether the

victims had actually read the label was

not available. Some victims attempted

to supply ventilation, however. In most

of the incidents, drug or alcohol use was

not reported.

Issue: Label Language

Comment: Specificity of warning. A

commenter stated that the sentence

‘‘NEVER burn charcoal inside homes,

vehicles or tents’’ is too specific. The

commenter suggests that the addition of

the words ‘‘such as’’ would prevent the

public from concluding that it would be

safe to burn charcoal in a confined

space other than a home, vehicle, or

tent.

Response: The CPSC incident data

show that people primarily use charcoal

as a heat source inside homes and,

secondarily, in vehicles and tents. Thus,

the label is intended to address use in

those areas. The commenter provides no

data showing that other locations are

likely to be involved in this type of

incident. Adding words that cannot be

shown to be beneficial is undesirable,

since people are more likely to read a

label message if it is short and concise.

Additional wording also could have

possible adverse effects on the label’s

height or lettering size. Accordingly, the

Commission declines to adopt the

suggestion.

Comment: Understanding the term

‘‘carbon monoxide.’’ A comment stated

that the label statement that charcoal

‘‘gives off carbon monoxide’’ may be

ambiguous to those with minimal

education or limited knowledge of

English. For example, the commenter

suggested that such users might think

that CO was associated with charcoal

ashes. The commenter suggests that the

term ‘‘gas’’ be used to link the statement

to the warning hazard.

Response: The Commission has no

reason to believe that persons with a

limited command of English would

interpret that ashes, or anything other

than a gas or fumes, would be ‘‘given

off’’ by charcoal. The charcoal does not

‘‘give off’’ ash, but rather becomes ash.

In addition, some consumers are aware

that CO is deadly and would therefore

be motivated to comply with the label

for that additional reason. The addition

of the word ‘‘gas’’ is not likely to be of

further benefit. Thus, no change in the

label language in this regard is needed.

Comment: Spanish and/or English. A

commenter notes that the summary data

indicate that Hispanics are at higher risk

than the general population. The

commenter states that this problem

could be better addressed if the label’s

text were in both English and Spanish.

Response: The Commission’s staff

previously recommended that if the

pictograms tested did not adequately

communicate the safety message, then

the message should be presented in both

English and Spanish. As noted above,

however, the Commission concludes

that the pictogram does adequately

convey the message. Furthermore,

according to the clinical psychologist

who administered the test—who

regularly works with low-income

Hispanics—many in the target

population are unable to read either

English or Spanish. [6, Tab E(2)]

Therefore, a safety message in Spanish

instead of a pictogram would not reach
19824 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

those Hispanics who do not read

Spanish. Additionally, while the largest

single group of minority victims

identified in the CPSC data is Hispanic,

others—most notably Asian immigrants

who do not read English or Spanish—

would not be informed by a label in

either language.

Accordingly, a pictogram appears to

be the most effective measure to address

those who do not read English. The

Commission does not believe that a

label that combines both English and

Spanish warning statements with a

pictogram is warranted. For the reasons

discussed above, the Commission

cannot conclude in this case that such

a label would be significantly more

effective than one combining a

pictogram and a warning statement in

English. Furthermore, including both

languages and a pictogram on the label

would increase the size of the label,

with potential additional costs to the

industry.

Comment: Children of illiterate

immigrants. A commenter suggested

that the Commission overlooked the fact

that children of persons illiterate in

English play an important role in the

family because the children can read

English and often act as the family’s

interpreters. Accordingly, the

commenter concluded that the label

should consist of a pictogram and an

English language warning that could be

understood by the 12 through 18 year

old children of illiterate immigrants.

The commenter suggested an expanded

version of the Commission’s proposed

label. The commenter suggests the label

should be ‘‘comprehensible by a child

with a reading level corresponding to

approximately the sixth grade.’’

Response: The Commission is not

aware of any data showing that the

children of illiterate immigrants act as

interpreters of the warning label on

packages of charcoal. Nevertheless, the

revised label for packages of charcoal,

issued below, is written at the seventh

grade level, as is the commenter’s

suggested label. Thus, most if not all of

the teenagers referred to by the

commenter would be able to read the

revised label.

The additional wording suggested by

the commenter would not necessarily

increase safe behavior compared to the

revised label. Further, the additional

wording could decrease the likelihood

that the label would be read by the user.

Accordingly, the Commission is not

adopting this commenter’s suggested

wording change.

Comment: Other toxic products. A

commenter believes that the current

labeling language is very clear; that

labeling refers to ‘‘toxic fumes.’’ The

commenter argues that because toxic

fumes other than carbon monoxide may

be emitted from burning charcoal, the

current labeling should not be revised.

Response: Although charcoal

produces combustion by-products other

than CO, CO production is the most

significant hazard. A specific reference

to CO will better communicate the

nature of that hazard, since many

people already are familiar with the

lethal potential of CO. Further, the

safety message conveyed by the label

addressing the CO hazard may address

the hazard of any other toxic fumes

produced by charcoal. Thus, the current

labeling language is being revised to

address only the CO hazard.

Comment: ‘‘Burning’’ charcoal. A

commenter suggests that the term

‘‘burning charcoal’’ implies that a flame

must be present in order to present the

hazard. However, smoldering coals are

equally dangerous. The commenter

suggests referring to ‘‘lit or partially lit,’’

instead of ‘‘burning,’’ charcoal.

Response: Charcoal is a familiar

product. Most people know that, when

charcoal is lit, flames are produced

initially and that the flames eventually

subside, resulting in glowing charcoal. It

is unlikely that consumers would think

that the phrase ‘‘burning charcoal’’

suggests that charcoal is not burning

unless it produces a flame. Accordingly,

replacing the word ‘‘burning’’ with the

longer phrase ‘‘lit or partially lit’’ is not

warranted.

Comment: Burn time. A commenter

stated that, although the proposed

warning is much more explicit than the

previous warning, it still gives no real

indication about how long charcoal

‘‘burns’’ and gives off CO after it no

longer seems to be burning. Even with

the proposed warning, some people may

still bring CO releasing charcoal into an

enclosed area thinking that it is no

longer dangerous.

Response: Information available to the

Commission indicates that most users

who are killed or injured by this CO

hazard are intentionally using charcoal

indoors as a heat source and are

unaware of the danger. Thus, the

revised warning label is intended to

address this primary scenario.

Further, it would be difficult to tell

consumers how to determine when the

charcoal is completely extinguished. In

addition, it is likely that adding the sort

of information suggested by this

commenter would dilute the label’s

ability to communicate the primary

hazard. Accordingly, the Commission is

not adopting this suggestion.

Comment: First-aid instruction on

label. A commenter suggested that, as

with other potentially fatal products, it

would help save lives if the warning

label also described what to do in the

case of CO poisoning.

Response: The labeling requirements

for charcoal under 16 CFR 1500.14(b)(6)

specifically state that they supplement

the labeling required for hazardous

household substances by section 2(p)(1)

of the FHSA. Section 2(p)(1) requires

that the label bear an instruction for

first-aid treatment when ‘‘necessary or

appropriate.’’

First-aid instructions in labels for

packages of charcoal would be useful

only after the users have disregarded or

failed to read the label’s warning to not

burn charcoal inside. Before a label’s

first-aid instruction would be useful

under these circumstances, a person

would have to suspect that the

symptoms being experienced or

observed are caused by fumes given off

by the burning charcoal. The incident

data available to the Commission do not

show that consumers realize the cause

of the symptoms being experienced.

Thus, the Commission lacks data at this

time from which to conclude that it is

necessary or appropriate to require firstaid instructions for CO poisoning on

packages of charcoal.

Issue: Conspicuousness of Label

Comment: Contrasting colors. A

commenter urges the CPSC to set more

concrete requirements for the

conspicuousness and legibility of the

warning label. The commenter suggests

dark lettering on a white background

with the word ‘‘WARNING’’ and the

pictogram ‘‘X’’ in red.

Response: The Commission agrees

that it is important that the revised label

be conspicuous and legible.

Accordingly, the Commission has

adopted a number of requirements to

achieve these goals. More than two

colors are not necessary to achieve

conspicuousness. To enhance the

conspicuousness of the label, the

revised label contains: contrasting

colors as specified in 16 CFR

1500.121(d)(1), a pictogram, and an

easily read type size. Other

enhancements, including a concise

safety message, make the safety

messages easily understood.

Requiring the use of red, white, and

a dark color in the label would, in some

cases, require either the redesign of the

bag’s graphics or machinery that can

print a higher number of colors. As

discussed below in Section G of this

notice, the purchase of such additional

equipment could increase the initial,

one-time expenses of the rule by more

than 5 times. It also could introduce

ongoing expenses that will not be

caused by the rule as adopted. The
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19825

4The Commission is always interested in

ensuring that the costs of its rules are reasonable in

relation to their expected benefits. For the reasons

given below, the Commission believes that is the

case here. However, in this type of proceeding,

there is no statutory requirement that costs and

benefits must be determined or balanced.

Commission cannot conclude that any

increase in effectiveness that might

occur as the result of using these

additional colors would warrant the

substantial additional cost of such a

rule. Accordingly, the Commission has

not adopted this suggestion.

Issue: Placement of Label

Comment: Margin to seam. A

commenter argued that allowing only 1

inch between the top of the warning and

the seam of the bag is not enough. The

commenter noted that many people

open the bag by tearing under the seam.

This practice could result in tearing

through the warning and rendering it

unreadable to the next user of the

charcoal left in the bag. The commenter

also stated that because people roll the

top part of the bag down to keep it

closed after removing some of the

charcoal, a third warning should be

required toward the bottom of the bag.

The commenter argued that, with the

present proposal, only the person who

first opens a bag of charcoal has a good

chance of seeing the warning.

Response: The Commission agrees

that the revised label could be

obliterated by ripping the bag. However,

many bags are constructed so the top

seam can be neatly opened. In any

event, the consumer is likely to see the

label before opening the bag. As to the

lack of visibility due to rolling the top

of the bag for storage, the label would

become visible again when the bag is

unrolled for use. There are no data

showing that the increased costs of

placing the warning labels lower on the

bag, or adding another warning label, to

address these concerns would be

justified.

Comment: Location of label’s

borderline. A commenter requested

clarification in the final rule that it is

the label’s heavy borderline that should

be at least 1 inch ‘‘below the seam and

at least 1 inch above any reading

material * * *.’’ Otherwise, the

commenter expressed the concern that

the rule could be interpreted as

applying the 1-inch clearances to the

lettering within the borderline.

Response: The Commission concludes

this comment has merit, and the final

rule has been clarified in this regard.

Issue: Typography

Comment: Boldface type and capital

letters. A commenter stated that if

boldface type is intended for any part of

the label, it should be clearly specified

in the final rule. Also capital letters

should be specified for the statement of

hazard, if that is the intent.

Response: The Commission agrees,

and this has been clearly specified in

the final rule.

Issue: Effectiveness of Labeling

Comment: Effectiveness of old label.

A commenter asked whether the

incidents involving charcoal were

occurring as a result of the existing

warning on the label or in spite of the

warning? If the latter is true, the

commenter recommends that the

Commission consider other alternatives

to address these incidents.

Response: The available information

is insufficient to show how the current

label affects users. However, the label

currently required is dangerously

misleading since it may imply to the

user that it is safe to burn charcoal

indoors. The label needs to be modified

to correct this flaw. Further, for the

reasons stated above, the label should be

modified to better address the hazard.

Thus, in either of the situations

described by the commenter, it is

appropriate to revise the label.

Comment: Benefits (effectiveness) of

new labels. A commenter contends that

the Commission should not impose

significant changes in the labeling

requirements for packages of charcoal

unless data exist in the record showing

that persons who would burn charcoal

indoors with the current label would

not do so with the revised label.

Another company was concerned about

the most likely potential benefit to

society instead of the maximum

potential benefit, which was estimated

at $134 million.

Response: The Commission is unable

to obtain data sufficient to quantify the

effectiveness of the new warning label.

However, as described above, there are

several problems with the current label.

The new warning label addresses the

deficiencies of the current label. The

revised label eliminates the potentially

misleading statement that implies that

consumers can safely burn charcoal

indoors if ventilation is provided. In

addition, the label’s arrangement and

wording more closely follow principles

established by labeling experts that are

intended to make labels more effective.

Finally, the new label incorporates a

pictogram, which is likely to make the

label more effective for the at-risk

populations that do not read English.

Therefore, the revised label will inform

people about the risks of burning

charcoal indoors better than the present

label.

The new label need not be very much

more effective than the current label in

order to justify its costs.4 The estimated

one-time cost to industry of revising the

label is $1 million. If this is viewed as

an investment that will save a life in the

future, the benefits of the rule would

exceed its costs if the label revisions

avert only one death within 32 years of

the change. (This assumes a value of $5

million for saving a statistical life and

a 5% discount rate. A 10% discount rate

would produce positive net benefits if

the death was averted during the next

16 years.)

Making some assumptions may help

to visualize the extremely low degree to

which the revised label would need to

be effective in preventing deaths to be

cost-effective. One assumption is that

the average estimated number of deaths

per year for the 7-year period 1986–1992

would continue if the label is not

changed. Under this assumption (and

with the 5% discount rate, $5 million

per life scenario described above), the

label’s revision would be cost-effective

if it were only about 1⁄10 of one percent

effective in reducing deaths.

Issue: Loss of Sales

Comment: Loss of sales. One

commenter is more concerned about the

potential for the rule to induce a loss in

sales of charcoal than about any

increase in printing costs. Another

commenter also is concerned about a

loss of sales, believing that a label

change is not justified by the record.

Response: Seventy-four percent of the

pictogram test subjects understood that

the pictogram indicates that they should

not burn charcoal in homes, tents, and

vehicles. However, none of the subjects

thought that the pictogram meant that

charcoal should not be burned or should

not be used for grilling. This indicates

that there should be no measurable

negative impact on sales of charcoal.

Issue: Effective Date

Comment: Length of delay. One

company recommends that the effective

date of the final rule be 12 to 18 months

after its publication, as proposed,

assuming the final rule is published in

January or February of 1996. Another

company requests at least a 30-month

effective date because the company

holds up to a 3-year supply of

preprinted bags. According to this

commenter, any effective date less than

30 months should apply only to bags

printed, rather than filled, on or after
19826 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

the effective date. One commenter

recommends that the new rule should

go into effect no later than 12 months

from October 1995 so that, by next

winter, charcoal bags will have the new

warning label.

Response: An effective date of

October 1996, requested by one

commenter, will not allow sufficient

time to change over to the new label. On

the other hand, the final rule was not

published by February 1996, as assumed

by the first commenter, a charcoal

manufacturer. The staff contacted this

commenter, who stated that an 18-

month effective date would not be a

problem if the rule was published by

June 1996. With publication of the rule

in April 1996, and an 18-month

effective date, 26 months from the

proposal in August 1995 will have

elapsed when the rule goes into effect.

By then, many firms are likely to have

eliminated or substantially reduced

their inventories of preprinted bags in

anticipation of these new requirements.

This should minimize bag inventory

loss by any company, including the

commenter who requested a 30-month

effective date. The Commission is

choosing an 18-month effective date,

which will provide sufficient time to

deplete most existing noncomplying

inventory. This will eliminate or

mitigate adverse economic

consequences from inventory loss.

Issue: Size of Label for Small Packages

Comment: Smaller labels. A

commenter stated that its smallest

package of charcoal (2.5 lb., 6 inches

wide) should be subject to different

minimum label-size requirements (11⁄2

inches high and 51⁄2 inches wide). The

commenter indicated that a label that is

a minimum of 11⁄2 inches high and 51⁄2

inches wide is needed on this package

to keep the label from running over the

sides of the package and detracting from

its appearance. The commenter

recommended that this could be

accomplished by moving the signal

word panel over the message panel, and

by slightly decreasing the size of the

lettering, the spacing between the safety

messages, and the size of the pictogram.

Response: The Commission agrees

that the final rule should allow a label

of the size requested on the smallestsize package of charcoal. The

Commission believes this will not

unduly compromise the label’s

conspicuousness or legibility, and will

allow the consumer to see the entire

label on these small bags. However, the

proposed configuration of the label

should be maintained by simply making

the label smaller. Using labels of more

than one configuration could cause

confusion for consumers. Accordingly,

the final rule should allow the smallest

package of charcoal to have a label that

is a minimum of 11⁄2 inches high and

51⁄2 inches wide.

Issue: Scope of the Requirement

Comment: Coverage of charcoal for

restaurants and other commercial

establishments. A comment suggests

that packages supplied to restaurants

and other commercial establishments

should not be excluded from the

labeling requirement. The commenter

argues that this would put workers and

patrons at risk.

Response: The terms of the rule itself

do not limit the locations to which it

will apply. The Commission intends

that all packages of charcoal that are

sold at retail and can be regulated under

the FHSA will be subject to the revised

requirements. However, the FHSA does

not grant jurisdiction for the

Commission to regulate products used

only in commercial establishments.

Under the FHSA, the Commission

can, except for toys, regulate only

hazardous substances that are

‘‘intended, or packaged in a form

suitable, for use in the household.’’

FHSA § 2(p), 15 U.S.C. 1261(p). Thus,

the only packages of charcoal that

would not be subject to the revised

labeling requirement are those that are

not sold at retail or are, e.g., in packages

that are so large they are not intended

or suitable for use in the household. If

it is impractical for charcoal

manufacturers to provide different

packages for home and commercial use,

the rule will have the effect of ensuring

that packages of charcoal used in

restaurants and other commercial

establishments will have the revised

labeling. To the extent that separate

packages are produced, the Commission

lacks the authority to take actions solely

to protect workers in commercial

establishments or to take actions to

protect consumers from risks that could

be adequately reduced by actions taken

under the Occupational Safety and

Health Act of 1970. 15 U.S.C. 2080(a).

However, the Commission is not aware

of any incident of CO poisoning from

charcoal used in a restaurant or similar

establishment.

Comment: Lump charcoal. A

commenter stated that perhaps ‘‘lump’’

charcoal should not be subject to the

labeling requirement. The commenter

speculated that the non-charcoal

ingredients in briquet-type charcoal may

contribute to the hazard in the reported

cases. The commenter also speculates

that the victims from less developed

countries may be familiar with the safe

use of lump charcoal and that the

incidents could be the result of the

misleading current labeling regarding

ventilation.

Response: Although there are some

differences between lump charcoal and

charcoal briquets, they both present a

serious CO hazard if misused. The CPSC

staff performed an experiment

comparing the emissions levels of CO

production from both lump and briquet

charcoal. The experiment showed that

similar masses of lump and briquet

charcoal produced similar amounts of

CO. Although lump charcoal produced

about half of the amount of CO as did

an equal volume of charcoal briquets,

the level of CO production from lump

charcoal was still well above that which

could produce dangerous

concentrations. Thus, there is no basis

for excluding lump charcoal from the

scope of the amended rule.

Comment: Other carbon-producing

products. A commenter stated that the

rule should apply to ‘‘[a]ny carbon

based or carbon producing product

whose end use is combustion and is

intended for household use * * *

includ[ing] wood chips, wood chunks,

wood logs, coals, products produced

from biomass, etc.’’ The commenter

argued that these products also produce

CO.

Response: The other products cited by

this commenter have not been shown to

be used in confined areas. Such use is

needed to create the hazard addressed

by the revised label. These other

products produce enough smoke that it

is not feasible to use them in homes,

vehicles, tents, or any confined area.

Thus, there is no basis for expanding the

scope of the rule to include these

products.

F. Effective Date

The rule applies only to filled

containers of charcoal. Marketers of

charcoal, however, have indicated that

it is not unusual to have an inventory

of printed bags that would take 1 or 2

years to use up. One commenter

indicated that it has up to 3 years or

more of a supply of preprinted bags in

storage. These marketers would prefer

that the revised requirement relate to

the date the bag or other container was

printed, so that all existing inventories

could be used. However, it would be

impractical for the Commission to

determine whether a bag was printed

before the effective date when the bag

might not be filled for some time after

that date. Accordingly, the Commission

has decided that the rule will apply to

all containers of subject charcoal that

are filled on or after the effective date.

In order to address the marketers’

concern about inventories, however, the
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19827

revised rule will not become effective

until sufficient time has passed for the

industry to use up most of its current

inventory of printed bags. The

Commission estimates that this will

have occurred by 18 months after the

final rule is issued, or November 3,

1997. This also will provide time to

revise the plates needed to print the

new label, revise any other plates that

may be affected on the bag, conduct

consumer acceptance tests if needed,

print new bags, and incorporate the new

bags into production. [15, Tab E] Of

course, as the Commission stated at the

time it proposed the revised label,

manufacturers who order additional

printing of bags between now and the

effective date of the rule should limit

the quantities ordered so that large

numbers of bags will not remain

unfilled at the effective date and have to

be discarded or stickered with the new

label.

Some manufacturers may wish to

voluntarily use the revised label before

the effective date of the final rule. For

such firms, the Commission will, until

further notice published in the Federal

Register, consider labels complying

with the final rule as complying with

the current requirements of 16 CFR

1500.14(b)(6). (The Commission

previously allowed use of the proposed

label before the effective date. Specific

authority for such use is not needed at

this time, because labels that comply

with the proposed rule will also comply

with the final rule.)

G. Economic and Product Information

[6, Tab G; 15, Tab E]

Charcoal is a solid carbon material

made from wood subjected to extremely

high temperature. It is available in

lump, briquet, and powdered forms. To

produce charcoal briquets, charcoal is

ground, mixed with other ingredients,

and compressed. Lump and briquet

charcoal is used as a fuel in cooking and

in specialized scientific, industrial, and

horticultural applications. Recreational

cooking consumes approximately 80–

90% of charcoal production.

Specialized uses account for the

remainder.

It is estimated that approximately

824,000 tons of charcoal briquets were

sold in 1995. Charcoal briquet sales

doubled between 1967 and 1977, were

relatively flat during the 1980’s, and

have risen since 1991. The rising

popularity of gas grills may explain the

flattening of sales during the 1980’s.

Charcoal briquet sales account for

approximately 80–90% of the annual

production of charcoal. Lump charcoal

sales are a very small percentage (less

than 4%, according to industry sources)

of the annual production of charcoal.

Imports comprise less than 1% of the

domestic sales of charcoal.

Supermarkets and hardware,

discount, drug, and garden supply

stores sell charcoal to consumers in a

variety of types and packages. Three

major types of charcoal briquets are

available. One is the standard briquet.

Another is the ‘‘instant-light’’ briquet,

which is impregnated with a flammable

substance. The third is a ‘‘flavor

additive’’ briquet which is produced

with an aromatic wood such as hickory

or mesquite. Standard briquets generally

are sold in multi-walled (multi-layered)

5, 10, 20, and 40-pound paper bags. The

instant-light briquets are available in

similar 21⁄2, 4, 5, 8, and 15-pound bags.

Briquets are also available in single-use,

wax impregnated, ‘‘light-the-bag’’

packages. Lump charcoal, which is pure

charcoal, is marketed as a natural

product and is available in packaging

similar to briquets. Charcoal also may be

sold in other sizes of bags or in

corrugated boxes, depending upon

marketing considerations. Based on an

informal study of the market in and

around Washington, D.C., the retail

price of charcoal ranges from

approximately $.25 to $.75 per pound,

depending on package size, although the

retail price of some specialty charcoals

may be higher.

Approximately 10 companies

manufacture lump and briquet charcoal

in the United States. Several companies

import charcoal. According to industry

representatives, the top five domestic

charcoal manufacturers control an

estimated 90–95% of the market, with

the leading company controlling

approximately 50%. Manufacturers

provide lump charcoal and charcoal

briquets under an estimated 250

different brand names, most of which

are private or ‘‘store’’ brands. Relatively

few are nationally or regionally

marketed brands.

According to the Barbecue Industry

Association (‘‘BIA’’), 71 million

households owned barbecue grills in

1993. [5] In addition, the BIA estimates

that 58% of grill owners (41 million

households) own a charcoal grill. The

peak season for cooking on a grill is

from the start of Daylight Savings Time

through Labor Day. However, 52% of

grills are used throughout the year. The

number of ‘‘barbecuing events’’ each

year (including gas and charcoal fuels)

more than doubled over a 10-year

period, with an estimated 2.6 billion

occurrences in 1993.

According to a BIA-sponsored

National Family Opinion survey

conducted in the summer of 1993, gas

grill owners indicated that they use

their grill about twice as often as

charcoal grill owners. [5] This ratio may

not apply year round, since there may

be a greater relative use of gas grills in

the winter. If it is assumed that this 2:1

ratio applies year round, however, the

number of barbecuing events attributed

to charcoal is approximately 870 million

in 1993. This results in an estimated

exposure of 21 such events per year per

household owning a charcoal grill.

It is estimated that approximately

824,000 tons of charcoal briquets were

sold in the U.S. in 1995. [15, Tab E] This

amounts to about 1.6 billion pounds of

briquets, or 160 million bags with an

average weight of 10 pounds. In 1993,

there were an estimated 870 million

charcoal barbecuing events. Dividing

the approximately 809,000 tons of

charcoal briquets sold that year by the

number of events, the average amount of

charcoal used was about 1.9 pounds per

event. If each household that owns a

charcoal grill barbecues 21 times a year,

each such household uses 40 pounds of

charcoal briquets per year, or the

equivalent of four 10-lb bags.

As noted above, there are

approximately 28 deaths and 300 COrelated emergency room-treated injuries

associated with the use of charcoal each

year. Id. Thus, there was approximately

one death for every 1.5 million

households owning charcoal grills (or

0.68 deaths per million such

households). Also, there was one CO

injury for every 136,667 households

owning charcoal grills (or 7.3 injuries

per million such households).

Additionally, the estimated 160 million

bags of charcoal briquets sold in 1995

were associated with approximately one

death for every 5.7 million charcoal

briquet bags (0.18 deaths per million

bags). Further, there was one CO injury

for about every 0.5 million bags (1.9

injuries per million bags).

The Commission estimates that

changing the labeling requirements for

packages of charcoal has the potential

for substantial benefits to society. Based

on the CPSC’s injury cost model, the

average annual societal cost of an injury

from charcoal-related CO poisoning is

approximately $10,000. The annual

societal cost of these injuries is

approximately $3 million, given the

estimated 300 such injuries per year.

Additionally, there are an estimated

28 deaths per year from charcoal-related

CO poisonings. Assuming a statistical

value of life of $5 million, these injuries

and deaths cost society about $143

million annually. The avoidance of

these injuries and deaths represents the

maximum potential benefits to society

of the new labeling requirements.
19828 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

If the Commission had mandated the

‘‘optimum’’ warning label described

above, which includes additional color

requirements, the costs to industry of

changing labels would have included

both one-time, start-up expenses and

continuous, ongoing expenses. Start-up

expenses include the cost of new

printing equipment, printing plates,

artwork, and negatives. Ongoing

expenses would relate to any additional

colors used in the warning label.

Industry representatives indicated

that the aggregate start-up expenses for

the ‘‘optimum’’ label could have

amounted to as much as $6 million.

Further, the ongoing costs for the added

colors that label would have required

could have been around $4 million per

year.

However, the Commission eased the

current requirements for the label

placement on bags of charcoal, and did

not mandate additional colors. This will

allow continued use of current printing

equipment. Therefore, the costs of the

revision that is being adopted are

estimated to be no more than $1 million

in start-up expenses, with no ongoing

expenses.

Besides the costs of making changes

to charcoal bags, loss of bag stocks

would be incurred if the effective date

does not allow for a substantial

reduction in old inventory of unfilled

bags. As discussed above, the effective

date of the revised labeling rule will be

18 months after publication of the final

rule. This should allow almost all firms

to use up existing inventories of printed

bags. As the Commission stated in the

proposal, ‘‘manufacturers who order

additional printing of bags between now

and the effective date of the rule should

limit the quantities ordered so that large

numbers of bags will not have to be

discarded or stickered with the new

label.’’ 60 FR at 40790. Packagers who

followed that advice will in effect have

had 26 months to deplete their

inventories of preprinted bags.

Only one industry member has

indicated that it has more than 2 years

inventory. If any preprinted bags remain

unfilled at the effective date, the costs

of not using these bags and of discarding

them are not expected to be significant.

No estimates are available of the

effectiveness of the revised label in

reducing charcoal-related CO injuries

and deaths. However, if the one-time

cost to industry of revising the label ($1

million) is viewed as an ‘‘investment’’

for saving a life in the future, the

benefits of the rule would exceed its

costs if the label revisions avert one

death within 32 years of the change.

(This assumes a value of $5 million for

saving a statistical life and a 5%

discount rate. A 10% discount rate

would produce positive net benefits if

the death was averted during the next

16 years.) Given the present death rate

of 28 per year, it is reasonable to believe

that such levels of effectiveness will be

achieved.

H. Regulatory Flexibility Act

Certification

When an agency undertakes a

rulemaking proceeding, the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq.,

generally requires the agency to prepare

initial and final regulatory flexibility

analyses describing the impact of the

rule on small businesses and other small

entities. The purpose of the Regulatory

Flexibility Act, as stated in section 2(b)

(5 U.S.C. 602 note), is to require

agencies, consistent with their

objectives, to fit the requirements of

regulations to the scale of the

businesses, organizations, and

governmental jurisdictions subject to

the regulations. Section 605 of the Act

provides that an agency is not required

to prepare a regulatory flexibility

analysis if the head of an agency

certifies that the rule will not have a

significant economic impact on a

substantial number of small entities.

The Commission’s Directorate for

Economic Analysis examined the

potential effects of the revised rule on

small entities. [15, Tab E] Businesses

affected by label-change costs may

include charcoal manufacturers

(approximately 10 firms), bag suppliers,

and firms that own a charcoal brand

name (proprietary or private label

brands). Industry representatives predict

that the bulk of the costs of developing

new labels will fall initially on the

charcoal manufacturers. As noted above,

these costs may include those associated

with the development or purchase of

new printing plates, artwork, and

negatives.

Several private label manufacturers

have indicated that they will be

disproportionately affected by a label

change. These firms package charcoal

under a large number of brand names,

which may require hundreds of plate

changes. In the notice of proposed

rulemaking, the Commission proposed

to ease the margin requirements of the

current regulation (i.e., allowing the

label to be at least 1 inch, instead of at

least 2 inches, below the seam of the

bag) and proposed continued use of

contrasting colors as opposed to use of

ANSI colors, which were originally

considered. Easing of the margin

requirements and use of contrasting

colors will substantially reduce the cost

of the label change. The costs may be

further mitigated if the firms are able to

pass them through to their customers or

if their plates are near the end of their

service life. Costs for small firms are not

expected to be significant, due to the

relatively small number of brands

handled by such firms.

The rule should not require firms to

buy new printing presses. Most

manufacturers will have enough time to

use up existing supplies of printed bags.

Bags filled with charcoal before the

effective date are not subject to the

revised requirements.

Accordingly, for the reasons given

above, the Commission certifies that the

rule will not have significant economic

effects on a substantial number of small

entities.

I. Environmental Considerations

Pursuant to the National

Environmental Policy Act, and in

accordance with the Council on

Environmental Quality regulations and

CPSC’s procedures for environmental

review, the Commission has assessed

the possible environmental effects

associated with the rule to revise the

warning labels for packages of charcoal.

[15, Tab E] Analysis of the potential

impact of this rule indicates that it will

have no significant effects on the

environment since the effective date

enables almost all firms to deplete

existing stocks of empty bags. (Some

firms have indicated that, depending on

the time of the year, they may have as

much as a 2-year supply of filled and

empty bags.) As previously noted, bags

filled before the effective date will not

be affected by the revised rule. Even if

some old inventory of bags remains, as

one commenter contends, the

environmental consequences are

expected to be insignificant.

Therefore, because the revised rule

would have no significant impact on the

environment, neither an environmental

assessment nor an environmental

impact statement is required.

J. Conclusion

For the reasons discussed above, the

Commission concludes that the labeling

required by section 2(p)(1) of the FHSA

for packages of charcoal is not adequate

for the protection of the public health

and safety, in view of the special hazard

of CO poisoning presented by using

charcoal in a confined area. The

Commission finds that the additional

label requirements in the revised label

issued below are necessary for the

protection of the public health and

safety. These requirements are issued

under the authority of section 3(b) of the

FHSA, 15 U.S.C. 1262(b).

Effective date: The final rule is

effective November 3, 1997.
Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations 19829

List of Subjects in 16 CFR Part 1500

Consumer protection, Hazardous

materials, Hazardous substances,

Imports, Infants and children, Labeling,

Law Enforcement, Toys.

For the reasons given above, the

Commission amends 16 CFR part 1500

as follows:

PART 1500—HAZARDOUS

SUBSTANCES AND ARTICLES;

ADMINISTRATION AND

ENFORCEMENT REGULATIONS

1. The authority citation for part 1500

is revised to read as follows:

Authority: 15 U.S.C. 1261–1278.

2. Section 1500.14 is amended by

redesignating paragraphs (b)(6) (i) and

(ii) as paragraphs (b)(6)(i) (A) and (B).

3. In § 1500.14, newly designated

paragraph (b)(6)(i)(A) is amended by

Nonvember 3, 1997 after ‘‘products’’.

4. Section 1500.14 is further amended

in newly designated paragraph

(b)(6)(i)(B), by adding ‘‘packaged before

November 3, 1997 after ‘‘charcoal’’.

5. Section 1500.14 is further amended

by adding a new paragraph (b)(6)(ii) to

read as follows:

§ 1500.14 Products requiring special

labeling under section 3(b) of the act.

* * * * *

(b) * * *

(6) * * *

(i) * * *

(ii)(A) Because inhalation of the

carbon monoxide produced by burning

charcoal indoors or in confined areas

can cause serious injury or death,

containers of such products packaged

on or after [insert date that is 18 months

after publication] shall bear the

following borderlined label.

BILLING CODE 6355–01–P

BILLING CODE 6355–01–C

(B) Except as provided in paragraph

(b)(6)(ii)(C) of this section, the following

requirements apply to bags of charcoal

subject to paragraph (b)(6)(ii)(A) of this

section. The label specified in paragraph

(b)(6)(ii)(A) of this section shall appear

within a heavy borderline, in a color

sharply contrasting to that of the

background, on both the front and back

panels in the upper 25 percent of the

panels of the bag, and with the outer

edge of the borderline at least 2.54 cm

(1 inch) below the seam and at least 2.54

cm (1 inch) above any other reading

material or design elements. The signal

word ‘‘WARNING’’ shall be in bold

capital letters in at least 7.14 mm (9⁄32

inch) type. The remaining text of the

warning statement shall be in at least

4.763 mm (3⁄16 inch) type. The phrase

‘‘CARBON MONOXIDE HAZARD’’ shall

be in bold. This phrase and the word

‘‘NEVER’’ shall be in all capital letters.

The lettering shall have a strokewidthto-height ratio of 1:6 to 1:8. The label

shall be at least 50.8 mm (2 inches) high

and 147.5 mm (53⁄16 inches) wide. The

label’s lettering, spacing between the

bottom of the letters of one line and the

top of the letter of the next line, and

pictogram shall have the size relation to

each other and to the remainder of the

label shown in paragraph (b)(6)(ii)(A) of

this section.

(C) For bags of charcoal subject to

paragraph (b)(6)(ii)(A) of this section

that are 6 inches or less wide, the

minimum label height may be reduced

to 38 mm (1.5 inches) and the minimum

width may be reduced to 139.7 mm (5.5

inches). The signal word ‘‘WARNING’’

shall be in capital letters in at least 6.32

mm (0.249 inch) type. The remaining

text of the warning shall be in at least

4.23 mm (0.166 inch) type. All other

requirements of paragraphs 6(b)(ii) (A)

and (B) of this section shall apply to

these bags.

Dated: April 29, 1996.

Sadye E. Dunn,

Secretary, Consumer Product Safety

Commission.

Appendix 1—List of Relevant

Documents

(Note: This list of relevant documents will

not be printed in the Code of Federal

Regulations.)

1. Petition HP 91–1 from Barbara Mauk.

2. Letter to Barbara Mauk from Sadye E.

Dunn, CPSC, January 28, 1993.

3. Hampson, N.B. et al., JAMA (January 5,

1994).

4. Cost information from industry.

a. The Clorox Company (Kingsford), P.O.

Box 493, Pleasanton, CA 94566.

b. King and Spalding, representing Royal

Oak Enterprises, Inc., 1730 Pennsylvania

Ave. N.W., Washington, D.C. 20006.

c. Hickory Specialties, Inc., P.O. Box 1669,

Brentwood, TN 37024.

5. Barbecue Industry Association survey.

Barbecue Industry Association, 710 East

Ogden, Suite 113, Naperville, IL 60563.

6. Briefing package dated July 6, 1995, with

Tabs A–H.

TAB A—Background Information on

Charcoal Labeling in Briefing Package

memo dated May 18, 1994, accompanied

by FDA’s Notices of Proposed and Final

Rulemaking dated September 2, 1970, and

August 11, 1971, and Petition for

Amending Labeling Requirements for

Charcoal Intended for Household Use,

dated October 12, 1990.

TAB B—Memorandum from Laureen E.

Burton of Directorate for Health Sciences to

Sharon R. White, entitled ‘‘Carbon

Monoxide Toxicity Review for the

Charcoal Labeling Project,’’ dated March 8,

1994.

TAB C—Memorandum from Leonard

Schachter, Directorate for Epidemiology,

Division of Hazard Analysis to Sharon R.

White, entitled ‘‘Charcoal Labeling

Project,’’ dated December 12, 1994.

TAB D—Memorandum from Charles M.

Jacobson, Office of Compliance and

Enforcement to Susan E. Womble, entitled

‘‘Compliance Experience with Current

FHSA Labeling Requirements for Charcoal

Briquets,’’ dated April 30, 1992.

TAB E—1. Memorandum from Sharon R.

White of Directorate for Epidemiology,
19830 Federal Register / Vol. 61, No. 87 / Friday, May 3, 1996 / Rules and Regulations

1See Section 237 of the Futures Trading Act of

1982 (7 U.S.C. 16a) and 31 U.S.C. 9701. For a

broader discussion of the history of Commission

fees, see 52 FR 46070 (Dec. 4, 1987).

Division of Human Factors, to The File

entitled, ‘‘Proposed Revisions to Labeling

Requirements for Packages of Charcoal’’

dated June 15, 1995.

2. Memorandum from George Sweet of

Directorate for Epidemiology, Division of

Human Factors to Sharon R. White

entitled, ‘‘Pictogram Testing for Warning

Labels on Charcoal Bags,’’ dated June 12,

1995.

TAB F—Logs of Industry Meetings on (1)

April 22, 1994, and (2) April 13, 1995.

TAB G—Memorandum from Mary F.

Donaldson of Directorate of Economic

Analysis to Sharon R. White, entitled

‘‘Economic Analysis of a Revision to

Charcoal Labeling,’’ dated June 22, 1995.

TAB H—Draft Federal Register Notice—

Notice of Proposed Rulemaking.

7. Letter from James C. Stephen, President,

Weber-Stephen Products Co., to Sharon R.

White, CPSC, May 11, 1995.

8. Letter from Harleigh Ewell, CPSC, to

James C. Stephen, President, Weber-Stephen

Products Co., June 29, 1994.

9. Woodson, W.; Tillman, B.; and Tillman,

P., 1992.

10. ANSI Z535.3–1991, American National

Standard, Criteria for Safety Symbols.

11. Perry, E., and Neily, M. (1985). Burning

Charcoal Briquettes in a Fireplace. U.S.

Consumer Product Safety Commission,

Washington, DC.

12. Letter from Leonard S. Gryn, Executive

Vice President, Weber-Stephen Products Co.,

to Harleigh Ewell, CPSC, July 5, 1995.

13. Notice of Proposed Rulemaking, 60 FR

40785 (August 10, 1995).

14. Comments on proposed rule, Nos.

CH96–1–1 through CH96–1–7.

15. Briefing package, consisting of a

briefing memorandum from Sharon White,

Project Manager, to the Commission, March

ll, 1996, and Tabs B and D–E:

TAB B—Memorandum from Leonard

Schachter, CPSC Directorate for

Epidemiology and Health Sciences, to

Sharon R. White, entitled ‘‘Deaths and

Injuries Associated with Charcoal,’’ dated

November 28, 1995.

TAB C—1. Memorandum from Sharon R.

White, CPSC Directorate for Engineering

Sciences, to File, entitled ‘‘Responses to

Comments on the Proposed Rule on the

Labeling Requirements for Packages of

Charcoal,’’ dated February 28, 1996.

2. Memorandum from Mary F. Donaldson,

CPSC Directorate for Economic Analysis, to

Sharon R. White, entitled ‘‘Response to

Comments, Proposed Rule Amending

Labeling on Packages of Charcoal,’’ dated

February 28, 1996.

3. Memorandum from Rikki Khanna, CPSC

Directorate for Engineering Sciences, to

Sharon R. White, entitled ‘‘Responses to

Comment on Proposed Rule for Labeling of

Retail Containers of Charcoal (REF: CH96–

1–3),’’ dated February 9, 1996.

4. Memorandum from Mary F. Toro of the

Office of Compliance, Division of

Regulatory Management, entitled Charcoal

Labeling Package—Comments on the NPR

dated December 13, 1995.

5. Memorandum from Kimberly Long of

Directorate for Epidemiology and Health

Sciences to Sharon R. White, entitled

‘‘Comments to Proposed Rule Amending

Package Labeling of Charcoal, FR., Vol. 60,

No. 154, August 10, 1995, pp. 40785,’’

dated December 6, 1995.

TAB E—Memorandum from Mary F.

Donaldson, CPSC Directorate for Economic

Analysis, to Sharon R. White, entitled

‘‘Economic Analysis of a Revision to

Charcoal Labeling,’’ dated December 8,

1995.

16. Memorandum from Mary Ann Danello,

Ph.D,. Associate Executive Director for

Epidemiology and Health Sciences,

‘‘Corrected Response to Comments for

Proposed Rule Amending Package Labeling

of Charcoal, FR, Vol. 60, No. 154, August 10,

1995, pp. 4078ff,’’ dated April 3, 1996.

[FR Doc. 96–10978 Filed 5–02–96; 8:45 am]

BILLING CODE 6355–01–P

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Parts 1, 5 and 31

Fees for Applications for Contract

Market Designation, Leverage

Commodity Registration and

Registered Futures Association and

Exchange Rule Enforcement and

Financial Reviews

AGENCY: Commodity Futures Trading

Commission.

ACTION: Final schedule of fees.

SUMMARY: The Commission periodically

adjusts fees charged for certain program

services to assure that they accurately

reflect current Commission costs. In this

regard, the staff recently reviewed the

Commission’s actual costs of processing

applications for contract market

designation (17 CFR part 5, appendix B),

audits of leverage transaction merchants

(17 CFR part 31, appendix B) and

registered futures association and

exchange rule enforcement and

financial reviews (17 CFR part 1,

appendix B). The following fee schedule

for fiscal 1996 reflects the actual costs

to the Commission of providing those

services during fiscal years 1993, 1994

and 1995. Accordingly, the Commission

will change the fees as follows:

Applications for contract market

designation for a futures contract will be

reduced from $9,600 to $8,300; contract

market designation for an option

contract will be increased from $1,600

to $1,800; contract markets that

simultaneously submit designation

applications for a futures and an option

on that futures contract will be reduced

from a combined fee of $10,000 for both

to $9,200 for both; and leverage

commodity registration will be

maintained at $4,500. In addition, the

Commission will publish the schedule

of fees for registered futures association

and exchange rule enforcement and

financial reviews.

EFFECTIVE DATE: Contract Market

Designation and Leverage Commodity

Registration May 3, 1996. Registered

Futures Association and Exchange Rule

Enforcement and Financial Reviews July

2, 1996.

FOR FURTHER INFORMATION CONTACT:

Gerald P. Smith, Special Assistant to the

Executive Director, Office of the

Executive Director, Commodity Futures

Trading Commission, Three Lafayette

Centre, 1155 21st Street, NW.,

Washington, DC 20581, telephone

number 202–418–5156.

SUPPLEMENTARY INFORMATION: The

Commission periodically reviews the

actual costs of providing services for

which fees are charged and adjusts these

fees accordingly. In connection with its

most recent review, the Commission has

determined that fees for contract market

designations should be adjusted. Also,

this release announces the fiscal 1996

schedule of fees for registered futures

association and exchange rule

enforcement and financial reviews and

maintains leverage commodity

registration fees.

Background Information

I. Computation of Fees

The Commission has established fees

for certain activities and functions

performed by the Commission.1 In

calculating the actual cost of processing

applications for contract market

designation, registering leverage

commodities, and performing registered

futures association and exchange rule

enforcement and financial reviews, the

Commission takes into account

personnel costs (direct costs), and

benefits and administrative costs

(overhead costs).

The Commission first determines

personnel costs by extracting data from

the agency’s Management Accounting

Structured Code (MASC) system.

Employees of the Commission record

the time spent on each project under the

MASC system. The Commission then

adds an overhead factor that is made up

of two components—benefits and

general and administrative costs.

Benefits, which include retirement,

insurance and leave, are based on a

government-wide standard established

by the Office of Management and

Budget in Circular A–76. General and

administrative costs include the