Penalties for Violation of Appliance Labeling Rule

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BILUNG CODE 8025-01-M FEDERAL TRADE COMMISSION 16 CFR Parts 1 and 3 Penalties for Violation of Appliance Labeling Rule AGENCY: Federal Trade Commission. ACTION: Final rules.

s u m m a r y: The Federal Trade Commission, pursuant to 42 U.S.C. 6303, 15 U.S.C. 46(g), and 5 U.S.C. 553, revises its Rules of Practice to provide procedures for the assessment of civil ' penalties for violations of the provisions of the Energy Policy and Conservation Act (“EPCA”) pertaining to labeling and advertising of consumer appliances and the Commission’s rules promulgated thereunder.

EFFECTIVE d a t e : October 10,1980. FOR FURTHER INFORMATION CONTACT*. Jonathan W. Cuneo, Office of General Counsel, Federal Trade Commission, Washington, D.C. 20580, (202) 523-3970. SUPPLEM ENTARY INFORMATION: On September 12,1979, the Commission published proposed rules for administrative assessment of civil penalties under section 333 of EPCA, 42 U.S.C. 6303, as amended on November 9, 1978, by the National Energy Conservation Policy Act, Pub. L. 95-619. 44 FR 53088 (1979).1 During the sixty-day comment period, the Commission received four comments. The Commission has considered the comments and has made appropriate modifications in the proposed rules. The Commission’s purpose in promulgating these rules is to provide fair and clear procedural rules for use in assessment of civil penalties, while retaining flexibility with respect to the procedures that it will employ in a section 1.94 determination. Thus, in proposing dm general rules, the Commission provided that its rules governing adjudicative proceedings, 16 CFR 3.1 et seq., would govern assessment of civil penalties in Commission adjudicative proceedings unless otherwise directed, and signaled its intent to publish in the Federal Register any significant alterations in the rules. One commentator urged that the Commission require itself to use the procedures in 16 CFR 3.1 et seq. In light of the flexibility that the Commission wishes to retain, the Commission declines to adopt this suggestion at this time. The Commission does recognize, however, a potential respondént’s need to know, at the time of election under § 1.93(b), what procedures the Commission would employ if the potential respondent were to choose to have its case adjudicated under § 1.94. Accordingly, the Commission has modified the notice provisions of § 1.93(a) to require that the Commission specify its procedures at the time of the notice of proposed penalty, if the Commission will use procedures other than those of Part 3.

'The Commission published in final form substantive rules to which these procedural rules relate on November 19.1979.44 FR 66465 (1979).

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67318 Federal Register / Vol. 45, No. 199 / Friday, October 10, 1980 / Rules and Regulations In addition, one commentator urged that the Commission modify § 1.93(a) to require the Commission to accompany a notice of proposed penalty with a proposed complaint, and another commentator urged that the Commission always include either a complaint or a statement of material facts. As one commentator correctly asserted, ‘‘[WJithout this kind of information, no intelligent election of procedures can be made.” Accordingly, the Commission alters its proposed Rule 1.93 to require either a statement of material facts or a proposed complaint. The Commission does not require a proposed complaint in every case because a statement of the material facts would adequately protect a potential respondent’s interest in receiving adequate notice. To require a proposed complaint would be unduly formalistic. The essence of the respondent’s interest and the Commission’s requirement is the information itself, not the form that the information may take.

One commentator, the Administrative Conference of the United States (“ACUS”), proposed that the Commission adopt specific criteria to assess the amount of civil penalties, and suggested that the Commission attempt to establish particular formulas for assessing violations. The Commission recognizes that there is a need to make determinations on penalty amounts by reference to standard criteria. Further, the criteria that ACUS has suggested would largely appear appropriate in a Commission assessment of civil penalties. Therefore, the Commission has modified § 1.97 to include most of the factors suggested by ACUS. On the other hand, because the Commission is lacking in experience in enforcing EPCA, it would be premature for the Commission to allocate precise numerical weights to the factors of establish fixed formulas for penalty assessment at this time. Finally, a number of the commentators asked that the Commission establish an enforcement moratorium and adopt a two-year statute of limitations. With respect to the enforcement moratorium, the Commission has previously considered and granted in part two applications; 45 FR 43162 (June 26,1980); 45 FR 40974 (June 17,1980). The Commission believes that no further relief is warranted in connection with the promulgation of the procedural rules. Similarly, the Commission believes that adoption of a two-year statute of limitations would not be appropriate because many violations may go undetected for a substantial period of time. One factor that the Commission will take into account in assessing the amount of penalties is the age of the violations. See Rule 1.97. In light of this protection, the Commission will not establish an absolute fixed statute of limitations at this time. Accordingly, the Commission amends its rules of practice as follows; PART I—GENERAL PROCEDURES 1.

By adding a new Subpart K to read as follows:

Subpart K—Penalties for Violation of Appliance Labeling Rules Sec.

1.92 Scope.

1.93 Notice of proposed penalty. 1.94 Commission proceeding to assess civil penalty.

1.95 Procedures upon election. 1.96 Compromise of penalty. 1.97 Amount of penalty. Subpart K—Penalties for Violation of Appliance Labeling Rules § 1.92 Scope.

The rules in this subpart apply to and govern proceedings for the assessment of civil penalties for the violation of section 332 of the Energy Policy and Conservation Act, 42 U.S.C. 6302, and the Commission’s Rules on Labeling and Advertising of Consumer Appliances, 16 CFR 305, promulgated under sections 324 and 326 of the Energy Policy and Conservation Act, 42 U.S.C. 6294 and 6296.

§ 1.93 Notice of proposed penalty. (a) Notice. Before issuing an order assessing a civil penalty under this subpart against any person, the Commission shall provide to such person notice of the proposed penalty. This notice shall (1) Inform such person of the opportunity to elect in writing within 30 days of receipt of the notice of proposed penalty to have procedures of § 1.95 (in lieu of those of § 1.94) apply with respect to such assessment; and (2) Include a copy of a proposed complaint conforming to the provision of §§ 3.11(b)(1) and (2) of the Commission’s Rules of Practice, or a statement of the material facts constituting the alleged violation and the legal basis for the proposed penalty; and (3) Include the amount of the proposed penalty; and (4) Include a statement of the procedural rules that the Commission will follow if respondent elects to proceed under § 1.94 unless the Commission chooses to follow subparts B, C, D, E and F of Part 3 of this chapter. (b) Election. Within 30 days of receipt of the notice of proposed penalty, the respondent shall, if it wishes to elect to have the procedures of § 1.95 apply, notify the Commission of the election in * writing. The notification, to be filed in accordance with § 4.2 of this chapter, may include any factual or legal reasons for which the proposed assessment order should not issue, should be reduced in amount, or should otherwise be modified.

§ 1.94 Com m ission proceeding to assess civil penalty.

If the respondent fails to elect to have the procedures of § 1.95 apply, the Commission shall determine whether to 'issue a complaint and thereby commence an adjudicative proceeding in conformance with section 333(d)(2)(A) of the Energy Policy and Conservation Act, 42 U.S.C. 6303(d)(2)(A). If the Commission votes to issue a complaint, the proceeding shall be conducted in accordance with Subparts B, C, D, E and F of Part 3 of this chapter, unless otherwise ordered in the notice of proposed penalty. In assessing a penalty, the Commission shall take into account the factors listed in § 1.97. § 1.95 Procedures upon election. (a) After receipt of the notification of election to apply the procedures of this section pursuant to § 1.93, the Commission shall promptly assess such penalty as it deems appropriate, in accordance with § 1.97. (b) If the civil penalty has not been paid within 60 calendar days after the assessment order has been issued under paragraph (a) of this section, the General Counsel, unless otherwise directed, shall institute an action in the appropriate district court of the United States for an order enforcing the assessment of the civil penalty. (c) Any election to have this section apply may not be revoked except with the .consent of the Commission. § 1.96 Com prom ise of penalty. The Commission may compromise any penalty or proposed penalty at any time, with leave of court when necessary, taking into account the nature and degree of violation and the impact of a penalty upon a particular respondent.

§ 1.97 Amount of penalty.

All penalties assessed under this subchapter shall be in the amount of $100 for each violation as described in section 333(a) of the Energy Policy ana Conservation Act, 42 U.S.C. 6303(a), unless the Commission shall otherwise direct. In considering the amount of penalty, the Commission shall take into account: (a) respondent’s size and

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Federal Register / Vol. 45, No. 199 / Friday, October 10, 1980 / Rules and Regulations 67319 ability to pay; (b) respondent’s good faith; (c) any history of previous violations; (d) the deterrent effect of the penalty action; (e) the length of time involved before the Commission was made aware of the violation; (f) the gravity of the violation, including the amount of harm to consumers and the public caused by the violation; and (g) such other matters as justice may require.

PART 3—RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS 2. By revising § 3.2 to read as follows: § 3.2 Nature of adjudicative proceedings. Adjudicative proceedings are those formal proceedings conducted under one or more of the statutes administered by the Commission which are required by statute to be determined on the record after opportunity for an agency hearing. The term includes hearings upon objections to orders relating to the promulgation, amendment, or repeal of rules under sections 4, 5 and 6 of the Fair Packaging and Labeling Act and proceedings for the assessment of civil penalties pursuant to § 1.94 of this chapter. It does not include other proceedings such as negotiations for the entry of consent orders; investigational hearings as distinguished from proceedings after the issuance of a complaint; requests for extensions of time to comply with final orders or other proceedings involving compliance with final orders; proceedings for the promulgation of industry guides or trade regulation rules; proceedings for fixing quantity limits under section 2(a) of the Clayton Act; investigations under section 5 of the Export Trade Act; rulemaking proceedings under the Fair Packaging and Labeling Act up to the time when the Commission determines under § 1.26(g) of this chapter that objections sufficient to warrant the holding of a public hearing have been filed; or the promulgation of substantive rules and regulations, determinations of classes of products exempted from statutory requirements, the establishment of name guides, or inspections and industry counseling, under sections 4(d) and 6(a) of the Wool Products Labeling Act of 1939, sections 7,8(b), and 8(c) of the Fur Products Labeling Act, and sections 7(c), 7(d), and 12(b) of the Textile Fiber Products Identification Act.

By direction of the Commission. Carol M. Thomas, Secretary.

(FR Doc. 80-31769 Filed 10-9-00; 8:45 amj BILLING CODE 6750-01-M 16 CFR Part 13 [Docket No. C-3041]