81 FR 19936 - Labeling and Advertising of Home Insulation

FEDERAL TRADE COMMISSION

Federal Register Volume 81, Issue 66 (April 6, 2016)

Page Range		19936-19939
FR Document		2016-07679

As part of the Commission's systematic review of all current FTC rules and guides, the Commission requests public comment on the overall costs, benefits, necessity, and regulatory and economic impact of the FTC's ``Trade Regulation Rule Concerning the Labeling and Advertising of Home Insulation'' (the ``R-value Rule'' or ``Rule'').

Federal Register, Volume 81 Issue 66 (Wednesday, April 6, 2016)

[Federal Register Volume 81, Number 66 (Wednesday, April 6, 2016)]
[Proposed Rules]
[Pages 19936-19939]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-07679]

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FEDERAL TRADE COMMISSION

16 CFR Part 460

RIN 3084-AB40

Labeling and Advertising of Home Insulation

AGENCY: Federal Trade Commission (``FTC'' or ``Commission'').

ACTION: Advance notice of proposed rulemaking; request for public
comment.

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SUMMARY: As part of the Commission's systematic review of all current
FTC rules and guides, the Commission requests public comment on the
overall costs, benefits, necessity, and regulatory and economic impact
of the FTC's ``Trade Regulation Rule Concerning the Labeling and
Advertising of Home Insulation'' (the ``R-value Rule'' or ``Rule'').

DATES: Comments must be received on or before June 6, 2016.

ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write: ``16 CFR part 460--R-
value Rule Review, File No. R811001'' on your comment, and file your
comment online at https://

[[Page 19937]]

ftcpublic.commentworks.com/ftc/rvaluerule by following the instructions
on the web-based form. If you prefer to file your comment on paper,
write ``16 CFR part 460--R-value Rule Review, Matter No. R811001'' on
your comment and on the envelope, and mail your comment to the
following address: Federal Trade Commission, Office of the Secretary,
600 Pennsylvania Avenue NW., Suite CC-5610 (Annex B), Washington, DC
20580, or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610 (Annex B), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Hampton Newsome, (202) 326-2889,
Attorney, Division of Enforcement, Bureau of Consumer Protection,
Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC
20580.

SUPPLEMENTARY INFORMATION:

I. Background

Thermal insulation is an important energy-savings product that
reduces consumers' heating and cooling costs and increases their home
energy efficiency. The Commission promulgated the R-value Rule, found
at 16 CFR part 460 (``the current Rule'' or ``the current R-value
Rule''), in 1979 to address the failure of the home insulation
marketplace to provide essential pre-purchase information to consumers,
primarily an insulation product's ``R-value.'' \1\ An insulation
product's ``R-value'' rates the product's ability to restrict heat flow
and, therefore, reduce energy costs. The higher the R-value, the better
the product's insulating ability. R-value ratings vary among different
types and forms of home insulations and even among products of the same
type and form.
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\1\ The Commission promulgated the current R-value Rule pursuant
to section 18 of the Federal Trade Commission Act (``FTC Act''), 15
U.S.C. 57a. The current Rule became effective on September 30, 1980.
See 44 FR 50218 (Aug. 27, 1979).
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The FTC's current R-value Rule provides substantiation and
disclosure requirements for insulation products used in the residential
market and prohibits certain claims unless they are true. Specifically,
the current Rule requires insulation sellers to disclose the insulation
product's R-value and related information for their products based on
uniform, industry-adopted test procedures.\2\ This information enables
consumers to evaluate the performance and cost effectiveness of
competing insulation products.
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\2\ Additional Commission rules or guides may also apply to home
insulation sellers. For example, the Commission's rules concerning
Disclosure of Written Consumer Product Warranty Terms and
Conditions, and the Pre-sale Availability of Written Warranty Terms,
16 CFR parts 701 and 702, specify warranty requirements; and the
Commission's Guides for the Use of Environmental Marketing Claims,
16 CFR part 260, address the application of section 5 of the FTC
Act, 15 U.S.C. 45, to environmental advertising and marketing claims
(e.g., recycled material claims). Further, section 5 declares that
unfair or deceptive acts or practices are unlawful, and requires
that advertisers and other sellers have a reasonable basis for
advertising and other promotional claims before they are
disseminated. See Deception Policy Statement, appended to Cliffdale
Assoc., Inc., 103 FTC 110, 174 (1984); and FTC Policy Statement on
Unfairness, appended to International Harvester Co., 104 F.T.C. 949
(1984); and Policy Statement Regarding Advertising Substantiation,
49 FR 30999 (Aug. 2, 1984), reprinted in Thompson Medical Co., 104
F.T.C. 839 (1984).
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A. Products Covered

The R-value Rule covers all ``home insulation products.'' Under the
current Rule, the term ``insulation'' includes any product ``mainly
used to slow down heat flow'' from, for example, a heated interior
through exterior walls to the outside.\3\ The current Rule covers most
types or forms of insulation marketed for use in residential
structures, whether or not the Rule specifically refers to such
insulation.\4\ It does not cover insulation sold for use in commercial
(including industrial) buildings. In addition, it generally does not
apply to non-insulation products with insulating characteristics, such
as storm windows or storm doors.
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\3\ See 16 CFR 460.2.
\4\ 16 CFR part 460 does not cover pipe insulation or any type
of duct insulation except for duct wrap.
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Home insulation falls into two basic categories: ``mass'' and
``reflective.'' Mass insulations reduce heat transfer by conduction
(through the insulation's mass), convection (air movement within, and
through, the air spaces inside the insulation), and radiation.
Reflective insulations (primarily aluminum foils) reduce heat transfer
when installed facing an airspace. Within these basic categories, home
insulation is sold in various types or materials (e.g., fiberglass,
cellulose, polyurethane, aluminum foil) and forms (e.g., batt, dry-
applied loose-fill, spray-applied, board stock, multi-sheet
reflective).

B. Covered Parties

The current Rule applies to home insulation manufacturers,
professional installers, retailers who sell insulation to consumers for
do-it-yourself installation, and new home sellers, including sellers of
manufactured housing. It also applies to testing laboratories that
conduct R-value tests for home insulation manufacturers or other
sellers who base their R-value claims on these test results.

C. The Rule's Basis

The Commission first issued the current R-value Rule in response to
a variety of unfair or deceptive acts or practices in the insulation
industry. Specifically, the Commission found that many sellers: (1)
Failed to disclose R-values, impeding informed purchasing decisions and
misleading consumers who based their purchases on price or thickness
alone; (2) exaggerated R-value disclosures and often failed to account
for material factors (e.g., aging, settling) that reduce thermal
performance; (3) failed to inform consumers about R-value's meaning and
importance; (4) exaggerated fuel bill savings and often did not
disclose that savings vary depending on consumers' particular
circumstances; or (5) falsely claimed that consumers' insulation
purchases would qualify for tax credits, or that products had been
``certified'' or ``favored'' by Federal agencies.\5\
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\5\ 44 FR at 50222-24 (Aug. 27, 1979).
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D. The Rule's Requirements

The current Rule requires manufacturers and others who sell home
insulation to disclose R-value and related information (e.g.,
thickness, coverage area per package) on package labels and
manufacturers' fact sheets. R-value disclosures must be derived from
tests conducted according to one of four specified American Society of
Testing and Materials (``ASTM'') test procedures that measure thermal
performance under ``steady-state'' (i.e., static) conditions.\6\ For
mass insulations, the required tests include ASTM C-177, C-236, C-518,
and C-976.\7\ Industry members must conduct tests for mass insulation
products on the insulation material alone (excluding any airspace) at a
mean temperature of 75 [deg]F. The current Rule requires testing for
reflective insulation products according to either ASTM C 236-89 (1993)
or ASTM C 976-90, which generate R-values for insulation systems (such
as those that include one or more air spaces).\8\ The current Rule's R-
value

[[Page 19938]]

tests account for certain factors that can affect insulation's thermal
performance. For example, the current Rule's R-value tests for
polyurethane, polyisocyanurate, and extruded polystyrene insulation
account for aging, and the required tests for loose-fill insulation
products reflect the effect of settling on R-values.\9\
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\6\ The current Rule incorporates by reference ASTM's test
procedures, which ASTM reviews and revises periodically. Under Sec.
460.7 of the Rule, the Commission will accept, but not require, the
use of a revised version of any of these standards 90 days after
ASTM adopts and publishes the revision. The Commission may, however,
reopen the rulemaking proceeding during the 90-day period, or at any
later time, to consider whether it should require use of the revised
procedure or reject it under Sec. 460.5.
\7\ 44 FR 50218, at 50226, n. 189.
\8\ The R-value of a single-sheet reflective insulation product
must be tested under ASTM E408 or another test method that provides
comparable results.
\9\ 44 FR at 50219-20, 50227-28 (Aug. 27, 1979).
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The current Rule also requires specific disclosures on manufacturer
product labels and fact sheets, installer receipts, and new home seller
contracts. For example, insulation labels must display, among other
things, the product's R-value and the statement ``R means resistance to
heat flow. The higher the R-value, the greater the insulating power.''
\10\ The current Rule also requires that certain affirmative
disclosures appear in advertising and other promotional materials
(including those on the Internet) that contain an R-value, price,
thickness, or energy-saving claim, or compare one type of insulation to
another. For example, if an advertisement contains an R-value, it must
disclose the type of insulation being sold and the thickness needed to
get that R-value, as well as the statement: ``The higher the R-value,
the greater the insulating power. Ask your seller for the fact sheet on
R-values.'' In addition, if an advertisement contains an energy saving
claim, it must disclose: ``Savings vary. Find out why in the seller's
fact sheet on R-values. Higher R-values mean greater insulating
power.'' \11\
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\10\ 16 CFR 460.12(c).
\11\ The current Rule requires manufacturers and other sellers
to have a ``reasonable basis'' for any energy-saving claims they
make. 16 CFR 460.19. Although the current Rule does not specify how
they must substantiate such claims, the Commission explained when
issuing the Rule that scientifically reliable measurements of fuel
use in actual houses, or reliable computer models or methods of heat
flow calculations, would meet the reasonable basis standard. 44 FR
at 50233-34 (Aug. 27, 1979). Sellers other than manufacturers can
rely on the manufacturer's claims unless they know, or should know,
that the manufacturer lacks a reasonable basis for the claims.
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II. Regulatory Review Program

The Commission reviews its rules and guides periodically to seek
information about their costs and benefits, regulatory and economic
impact, and general effectiveness in protecting consumers and helping
industry avoid deceptive claims. These reviews assist the Commission in
identifying rules and guides that warrant modification or rescission.
As part of its last review in 2005, the Commission issued several
amendments to update and improve the Rule.\12\
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\12\ 70 FR 31258 (May 31, 2005).
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With this document, the Commission initiates a new review. The
Commission solicits comments on, among other things, the economic
impact of, and the continuing need for, the R-value Rule; the Rule's
benefits to consumers; and the burdens it places on industry members
subject to the requirements, including small businesses.

III. Issues for Comments

To aid commenters in submitting information, the Commission has
prepared the following specific questions related to the R-value Rule.
The Commission seeks comments on these and any other issues related to
the Rule's current requirements. In their replies, commenters should
provide any available evidence that supports their position.

A. General Regulatory Review Questions

(1) Need: Is there a continuing need for the Rule? Why or why not?
(2) Benefits and Costs to Consumers: What benefits has the Rule
provided to consumers, and does the Rule impose any significant costs
on consumers?
(3) Benefits and Costs to Industry Members: What benefits, if any,
has the Rule provided to businesses, and does the Rule impose any
significant costs, including costs of compliance, on businesses,
including small businesses?
(4) Recommended Changes: What modifications, if any, should the
Commission make to the Rule to increase its benefits or reduce its
costs? How would these modifications affect the costs and benefits of
the Rule for consumers? How would these modifications affect the costs
and benefits of the Rule for businesses, particularly small businesses?
(5) Impact on Information: What impact has the Rule had on the flow
of truthful information to consumers and on the flow of deceptive
information to consumers?
(6) Compliance: Provide any evidence concerning the degree of
industry compliance with the Rule. Does this evidence indicate that the
Rule should be modified? If so, why, and how? If not, why not?
(7) Unnecessary Provisions: Provide any evidence concerning whether
any of the Rule's provisions are no longer necessary. Explain why these
provisions are unnecessary.
(8) Additional Unfair or Deceptive Practices: What potentially
unfair or deceptive practices, not covered by the Rule, related to
insulation products are occurring in the marketplace? Are such
practices prevalent in the market? If so, please describe such
practices, including their impact on consumers. Provide any evidence,
such as empirical data, consumer perception studies, or consumer
complaints, that demonstrates the extent of such practices. Provide any
evidence that demonstrates whether such practices cause consumer
injury. With reference to such practices, should the Rule be modified?
If so, why, and how? If not, why not?
(9) Product Coverage: Should the Commission broaden the Rule to
include products not currently covered? Provide any evidence that
supports your position. What potentially unfair or deceptive practices
related to products not covered by the Rule are occurring in the
marketplace? Are such practices prevalent in the market? If so, please
describe such practices, including their impact on consumers. Provide
any evidence, such as empirical data, consumer perception studies, or
consumer complaints, that demonstrates the extent of such practices.
Provide any evidence that demonstrates whether such practices cause
consumer injury.
(10) Technological or Economic Changes: What modifications, if any,
should be made to the Rule to account for current or impending changes
in technology or economic conditions? How would these modifications
affect the costs and benefits of the Rule for consumers and businesses,
particularly small businesses?
(11) Conflicts With Other Requirements: Does the Rule overlap or
conflict with other Federal, State, or local laws or regulations? If
so, how? Provide any evidence that supports your position. With
reference to the asserted conflicts, should the Rule be modified? If
so, why, and how? If not, why not? Are there any Rule changes necessary
to help state law enforcement agencies combat deceptive practices in
the insulation market? Provide any evidence concerning whether the Rule
has assisted in promoting national consistency with respect to the
advertising of insulation products.

B. Specific Questions Related to the R-Value Rule

(1) Aging of Cellular Plastics: Should the Commission update the
required test procedures for the aging of cellular plastic insulations
under 460.5(a)(1) to ensure consistency among R-value claims and to
otherwise prevent deception? Specifically, should the Commission amend
the Rule to require ASTM 1303 (``Standard Test Method for Predicting
Long-Term Thermal Resistance of Closed-Cell Foam

[[Page 19939]]

Insulation'') or a different test? If so, to which products should this
test apply? \13\
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\13\ Certain types of cellular plastics insulations (e.g.,
polyurethane, polyisocyanurate, and extruded polystyrene boardstock
insulations) contain a gas other than normal air in the product's
voids (i.e., small spaces or bubbles throughout the material). Such
gas gives the product an initial R-value that is higher than it
would have if the voids contained normal air. However, the R-value
for these insulations decreases over time as the gas escapes the
material and is replaced by normal air.
The current Rule addresses this aging process by requiring that
R-value tests be performed on specimens that ``fully reflect the
effect of aging on the product's R-value.'' Section 460.5(a)(1) of
the Rule accepts the use of the ``accelerated aging'' procedure in
General Services Administration (``GSA'') Purchase Specification HH-
I-530A (which was in effect at the time the Commission promulgated
the Rule) as a permissible ``safe harbor'' procedure, but also
allows manufacturers to use ``another reliable procedure.''
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(2) Affirmative Disclosures: Should the Commission consider
changing, adding, or removing affirmative disclosures required by the
Rule for labeling and advertising related to mass insulation,
reflective insulation, or radiant barriers?
(3) Foam Insulation: Given the significant increase in the use of
foam insulation products since the last Rule review, should the
Commission consider any Rule changes to help prevent deception in the
marketing of such products, or reduce unnecessary burdens on sellers?
(4) Testing Requirements: Should the Commission consider any
changes to the testing provisions in the Rule? Such potential changes
include, but are not limited to, test updates, the addition of new or
existing tests not currently referenced in the Rule, or changes to
other testing-related requirement such as the Rule's ``tolerance''
provision (Sec. 460.8).\14\ Are there any tests currently referenced
in the Rule that should be removed?
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\14\ The tolerance provision (Sec. 460.8) states that no
individual specimen of the insulation an industry member sells can
have an R-value more than 10% below the R-value shown on the
product's label.
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IV. Comment Submissions

You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 6, 2016.
Write ``16 CFR part 460--R-value Rule Review, File No. R811001'' on
your comment. Your comment--including your name and your state--will be
placed on the public record of this proceeding, including, to the
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the
Commission tries to remove individuals' home contact information from
comments before placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, such as anyone's Social Security
number, date of birth, driver's license number or other state
identification number or foreign country equivalent, passport number,
financial account number, or credit or debit card number. You are also
solely responsible for making sure that your comment does not include
any sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which is . . . privileged or confidential,'' as discussed in section
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR
4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c). Your comment will be kept
confidential only if the FTC General Counsel grants your request in
accordance with the law and the public interest.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online, or send them to the Commission by courier or
overnight service. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/r-valuereview, by following the instruction on the web-based form.
If this Notice appears at http://www.regulations.gov, you also may file
a comment through that Web site.
If you prefer to file your comment on paper, write ``16 CFR part
460--R-value Rule Review, File No. R811001'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite
CC-5610 (Annex B), Washington, DC 20580, or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex
B), Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
ANPR and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding, as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before June 6, 2016. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see http://www.ftc.gov/ftc/privacy.htm.

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-07679 Filed 4-5-16; 8:45 am]
BILLING CODE 6750-01-P

19936 Federal Register / Vol. 81, No. 66 / Wednesday, April 6, 2016 / Proposed Rules

recent legislative action made under the ■ b. Revising the first sentence of the ■ a. Revising paragraph (a) introductory
RISE Act and will implement new redesignated paragraph (a); and text;
agency policies regarding the expansion ■ c. Adding paragraph (b). ■ b. Removing the word ‘‘and’’ from
of the definition of mitigation as it The revisions and additions read as paragraph (a)(3);
pertains to the Disaster Loan Program, follows: ■ c. Revising paragraph (a)(4); and
and the inclusion of malfeasance. ■ d. Adding paragraph (a)(5).
§ 123.18 Can I request an increase in the The revisions and additions read as
List of Subjects in 13 CFR Part 123 amount of a physical disaster loan?
follows:
Disaster assistance, Loan programs- (a) Generally, SBA will consider your
business, Reporting and recordkeeping request for an increase in your loan if § 123.105 How much can I borrow with a
requirements, Small businesses. you can show that the eligible cost of home disaster loan and what limits apply on
repair or replacement of damages use of funds and repayment terms?
For reasons set forth in the preamble,
increased because of events occurring (a) There are limits on how much
SBA proposes to amend 13 CFR part 123
after the loan approval that were beyond money you can borrow for particular
as follows:
your control.* * * purposes:
PART 123—DISASTER LOAN (b) For all disasters occurring on or * * * * *
PROGRAM after November 25, 2015, you may also (4) 20 percent of the verified loss (not
request an increase in your loan if you including refinancing or malfeasance),
■ 1. The authority citation for part 123 suffered substantial economic damage before deduction of compensation from
continues to read as follows: or substantial risks to health or safety as other sources, up to a maximum of
Authority: 15 U.S.C. 632, 634(b)(6), 636(b), a result of malfeasance in connection $200,000 for post-disaster mitigation
636(d), 657n; Pub. L. 102–395, 106 Stat. with the repair or replacement of real (see § 123.107); and
1828, 1864; Pub. L. 103–75, 107 Stat. 739; property or business machinery and (5) $200,000 for eligible malfeasance,
and Pub. L. 106–50, 113 Stat. 245. equipment for which SBA made a pursuant to § 123.18.
■ 2. Amend § 123.2 by revising the disaster loan. See § 123.105 for limits on * * * * *
seventh sentence to read as follows: home loan amounts and § 123.202 for
Dated: March 30, 2016.
limits on business loan amounts.
§ 123.2 What are disaster loans and Malfeasance may include, but is not Maria Contreras-Sweet,
disaster declarations? limited to, nonperformance of all or any Administrator.
* * * Sudden events that cause portion of the work for which a [FR Doc. 2016–07750 Filed 4–5–16; 8:45 am]
substantial economic injury may be contractor was paid, work that does not BILLING CODE 8025–01–P
disasters even if they do not cause meet acceptable standards, or use of
physical damage to a victim’s property. substandard materials.
* * * ■ 7. Amend § 123.20 by redesignating FEDERAL TRADE COMMISSION
■ 3. Amend § 123.3 by revising the undesignated text as paragraph (a)
paragraph (a)(1) to read as follows: and adding paragraph (b) to read as 16 CFR Part 460
follows:
§ 123.3 How are disaster declarations RIN 3084–AB40
made? § 123.20 How long do I have to request an
(a) * * * increase in the amount of a physical Labeling and Advertising of Home
(1) The President declares a Major disaster loan or an economic injury loan? Insulation
Disaster and authorizes Federal (a) * * * AGENCY: Federal Trade Commission
Assistance, including individual (b) For physical disaster loan (‘‘FTC’’ or ‘‘Commission’’).
assistance (Assistance to Individuals increases requested under § 123.18(b) as
ACTION: Advance notice of proposed
and Households Program). a result of malfeasance, the request must
rulemaking; request for public
* * * * * be received not later than two years after
comment.
4. Amend § 123.11 by revising the date of final disbursement.
paragraph (a)(2) to read as follows: ■ 8. Amend § 123.21 by revising the first SUMMARY: As part of the Commission’s
and third sentences to read as follows: systematic review of all current FTC
§ 123.11 Does SBA require collateral for
§ 123.21 What is a mitigation measure? rules and guides, the Commission
any of its disaster loans?
requests public comment on the overall
(a) * * * A mitigation measure is something costs, benefits, necessity, and regulatory
(2) Physical disaster home and done for the purpose of protecting and economic impact of the FTC’s
physical disaster business loans. property and occupants against disaster ‘‘Trade Regulation Rule Concerning the
Generally, SBA will not require that you related damage.* * * Examples of Labeling and Advertising of Home
pledge collateral to secure a physical mitigation measures include building Insulation’’ (the ‘‘R-value Rule’’ or
disaster home or physical disaster retaining walls, sea walls, grading and ‘‘Rule’’).
business loan of $25,000 or less. This contouring land, elevating flood prone
authority expires on November 25, structures, relocating utilities, DATES: Comments must be received on
2018, unless extended by statute. constructing a safe room or similar or before June 6, 2016.
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS

* * * * * storm shelter (if such safe room or ADDRESSES: Interested parties may file a
similar storm shelter is constructed in comment online or on paper, by
§ 123.13 [Amended] accordance with applicable standards following the instructions in the
■ 5. Amend § 123.13 by removing the issued by the Federal Emergency Request for Comment part of the
parenthetical phrase ‘‘(OMB Approval Management Agency), or retrofitting SUPPLEMENTARY INFORMATION section
No. 3245–0122.)’’ from paragraph (a). structures to protect against high winds, below. Write: ‘‘16 CFR part 460—R-
■ 6. Amend § 123.18 by: earthquakes, flood, wildfires, or other value Rule Review, File No. R811001’’
■ a. Redesignating the undesignated text physical disasters.* * * on your comment, and file your
as paragraph (a); ■ 9. Amend § 123.105 by: comment online at https://

VerDate Sep<11>2014 18:03 Apr 05, 2016 Jkt 238001 PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 E:\FR\FM\06APP1.SGM 06APP1

Federal Register / Vol. 81, No. 66 / Wednesday, April 6, 2016 / Proposed Rules 19937

ftcpublic.commentworks.com/ftc/ consumers to evaluate the performance other sellers who base their R-value
rvaluerule by following the instructions and cost effectiveness of competing claims on these test results.
on the web-based form. If you prefer to insulation products.
C. The Rule’s Basis
file your comment on paper, write ‘‘16
A. Products Covered The Commission first issued the
CFR part 460—R-value Rule Review,
Matter No. R811001’’ on your comment The R-value Rule covers all ‘‘home current R-value Rule in response to a
and on the envelope, and mail your insulation products.’’ Under the current variety of unfair or deceptive acts or
comment to the following address: Rule, the term ‘‘insulation’’ includes practices in the insulation industry.
Federal Trade Commission, Office of the any product ‘‘mainly used to slow down Specifically, the Commission found that
Secretary, 600 Pennsylvania Avenue heat flow’’ from, for example, a heated many sellers: (1) Failed to disclose R-
NW., Suite CC–5610 (Annex B), interior through exterior walls to the values, impeding informed purchasing
Washington, DC 20580, or deliver your outside.3 The current Rule covers most decisions and misleading consumers
comment to the following address: types or forms of insulation marketed who based their purchases on price or
Federal Trade Commission, Office of the for use in residential structures, whether thickness alone; (2) exaggerated R-value
Secretary, Constitution Center, 400 7th or not the Rule specifically refers to disclosures and often failed to account
Street SW., 5th Floor, Suite 5610 such insulation.4 It does not cover for material factors (e.g., aging, settling)
(Annex B), Washington, DC 20024. insulation sold for use in commercial that reduce thermal performance; (3)
(including industrial) buildings. In failed to inform consumers about R-
FOR FURTHER INFORMATION CONTACT:
addition, it generally does not apply to value’s meaning and importance; (4)
Hampton Newsome, (202) 326–2889,
non-insulation products with insulating exaggerated fuel bill savings and often
Attorney, Division of Enforcement,
characteristics, such as storm windows did not disclose that savings vary
Bureau of Consumer Protection, Federal
or storm doors. depending on consumers’ particular
Trade Commission, 600 Pennsylvania Home insulation falls into two basic
Avenue NW., Washington, DC 20580. circumstances; or (5) falsely claimed
categories: ‘‘mass’’ and ‘‘reflective.’’ that consumers’ insulation purchases
SUPPLEMENTARY INFORMATION: Mass insulations reduce heat transfer by would qualify for tax credits, or that
I. Background conduction (through the insulation’s products had been ‘‘certified’’ or
mass), convection (air movement ‘‘favored’’ by Federal agencies.5
Thermal insulation is an important within, and through, the air spaces
energy-savings product that reduces inside the insulation), and radiation. D. The Rule’s Requirements
consumers’ heating and cooling costs Reflective insulations (primarily
and increases their home energy The current Rule requires
aluminum foils) reduce heat transfer manufacturers and others who sell
efficiency. The Commission when installed facing an airspace.
promulgated the R-value Rule, found at home insulation to disclose R-value and
Within these basic categories, home related information (e.g., thickness,
16 CFR part 460 (‘‘the current Rule’’ or insulation is sold in various types or
‘‘the current R-value Rule’’), in 1979 to coverage area per package) on package
materials (e.g., fiberglass, cellulose, labels and manufacturers’ fact sheets. R-
address the failure of the home polyurethane, aluminum foil) and forms
insulation marketplace to provide value disclosures must be derived from
(e.g., batt, dry-applied loose-fill, spray- tests conducted according to one of four
essential pre-purchase information to applied, board stock, multi-sheet
consumers, primarily an insulation specified American Society of Testing
reflective). and Materials (‘‘ASTM’’) test procedures
product’s ‘‘R-value.’’ 1 An insulation
product’s ‘‘R-value’’ rates the product’s B. Covered Parties that measure thermal performance
ability to restrict heat flow and, The current Rule applies to home under ‘‘steady-state’’ (i.e., static)
therefore, reduce energy costs. The insulation manufacturers, professional conditions.6 For mass insulations, the
higher the R-value, the better the installers, retailers who sell insulation required tests include ASTM C–177, C–
product’s insulating ability. R-value to consumers for do-it-yourself 236, C–518, and C–976.7 Industry
ratings vary among different types and installation, and new home sellers, members must conduct tests for mass
forms of home insulations and even including sellers of manufactured insulation products on the insulation
among products of the same type and housing. It also applies to testing material alone (excluding any airspace)
form. laboratories that conduct R-value tests at a mean temperature of 75 °F. The
The FTC’s current R-value Rule for home insulation manufacturers or current Rule requires testing for
provides substantiation and disclosure reflective insulation products according
requirements for insulation products Warranty Terms, 16 CFR parts 701 and 702, specify
to either ASTM C 236–89 (1993) or
used in the residential market and warranty requirements; and the Commission’s ASTM C 976–90, which generate R-
prohibits certain claims unless they are Guides for the Use of Environmental Marketing values for insulation systems (such as
Claims, 16 CFR part 260, address the application of those that include one or more air
true. Specifically, the current Rule section 5 of the FTC Act, 15 U.S.C. 45, to
requires insulation sellers to disclose environmental advertising and marketing claims
spaces).8 The current Rule’s R-value
the insulation product’s R-value and (e.g., recycled material claims). Further, section 5
5 44 FR at 50222–24 (Aug. 27, 1979).
related information for their products declares that unfair or deceptive acts or practices
are unlawful, and requires that advertisers and 6 The current Rule incorporates by reference
based on uniform, industry-adopted test other sellers have a reasonable basis for advertising ASTM’s test procedures, which ASTM reviews and
procedures.2 This information enables and other promotional claims before they are revises periodically. Under § 460.7 of the Rule, the
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disseminated. See Deception Policy Statement, Commission will accept, but not require, the use of
1 The Commission promulgated the current R- appended to Cliffdale Assoc., Inc., 103 FTC 110, a revised version of any of these standards 90 days
value Rule pursuant to section 18 of the Federal 174 (1984); and FTC Policy Statement on after ASTM adopts and publishes the revision. The
Trade Commission Act (‘‘FTC Act’’), 15 U.S.C. 57a. Unfairness, appended to International Harvester Commission may, however, reopen the rulemaking
The current Rule became effective on September 30, Co., 104 F.T.C. 949 (1984); and Policy Statement proceeding during the 90-day period, or at any later
1980. See 44 FR 50218 (Aug. 27, 1979). Regarding Advertising Substantiation, 49 FR 30999 time, to consider whether it should require use of
2 Additional Commission rules or guides may also (Aug. 2, 1984), reprinted in Thompson Medical Co., the revised procedure or reject it under § 460.5.
apply to home insulation sellers. For example, the 104 F.T.C. 839 (1984). 7 44 FR 50218, at 50226, n. 189.
3 See 16 CFR 460.2.
Commission’s rules concerning Disclosure of 8 The R-value of a single-sheet reflective

Written Consumer Product Warranty Terms and 4 16 CFR part 460 does not cover pipe insulation insulation product must be tested under ASTM
Conditions, and the Pre-sale Availability of Written or any type of duct insulation except for duct wrap. Continued

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19938 Federal Register / Vol. 81, No. 66 / Wednesday, April 6, 2016 / Proposed Rules

tests account for certain factors that can amendments to update and improve the occurring in the marketplace? Are such
affect insulation’s thermal performance. Rule.12 practices prevalent in the market? If so,
For example, the current Rule’s R-value With this document, the Commission please describe such practices,
tests for polyurethane, initiates a new review. The Commission including their impact on consumers.
polyisocyanurate, and extruded solicits comments on, among other Provide any evidence, such as empirical
polystyrene insulation account for things, the economic impact of, and the data, consumer perception studies, or
aging, and the required tests for loose- continuing need for, the R-value Rule; consumer complaints, that demonstrates
fill insulation products reflect the effect the Rule’s benefits to consumers; and the extent of such practices. Provide any
of settling on R-values.9 the burdens it places on industry evidence that demonstrates whether
The current Rule also requires members subject to the requirements, such practices cause consumer injury.
specific disclosures on manufacturer including small businesses. With reference to such practices, should
product labels and fact sheets, installer the Rule be modified? If so, why, and
III. Issues for Comments how? If not, why not?
receipts, and new home seller contracts.
For example, insulation labels must To aid commenters in submitting (9) Product Coverage: Should the
display, among other things, the information, the Commission has Commission broaden the Rule to
product’s R-value and the statement ‘‘R prepared the following specific include products not currently covered?
means resistance to heat flow. The questions related to the R-value Rule. Provide any evidence that supports your
higher the R-value, the greater the The Commission seeks comments on position. What potentially unfair or
insulating power.’’ 10 The current Rule these and any other issues related to the deceptive practices related to products
also requires that certain affirmative Rule’s current requirements. In their not covered by the Rule are occurring in
disclosures appear in advertising and replies, commenters should provide any the marketplace? Are such practices
other promotional materials (including available evidence that supports their prevalent in the market? If so, please
those on the Internet) that contain an R- position. describe such practices, including their
impact on consumers. Provide any
value, price, thickness, or energy-saving A. General Regulatory Review Questions evidence, such as empirical data,
claim, or compare one type of insulation
(1) Need: Is there a continuing need consumer perception studies, or
to another. For example, if an
for the Rule? Why or why not? consumer complaints, that demonstrates
advertisement contains an R-value, it (2) Benefits and Costs to Consumers: the extent of such practices. Provide any
must disclose the type of insulation What benefits has the Rule provided to evidence that demonstrates whether
being sold and the thickness needed to consumers, and does the Rule impose such practices cause consumer injury.
get that R-value, as well as the any significant costs on consumers? (10) Technological or Economic
statement: ‘‘The higher the R-value, the (3) Benefits and Costs to Industry Changes: What modifications, if any,
greater the insulating power. Ask your Members: What benefits, if any, has the should be made to the Rule to account
seller for the fact sheet on R-values.’’ In Rule provided to businesses, and does for current or impending changes in
addition, if an advertisement contains the Rule impose any significant costs, technology or economic conditions?
an energy saving claim, it must disclose: including costs of compliance, on How would these modifications affect
‘‘Savings vary. Find out why in the businesses, including small businesses? the costs and benefits of the Rule for
seller’s fact sheet on R-values. Higher R- (4) Recommended Changes: What consumers and businesses, particularly
values mean greater insulating modifications, if any, should the small businesses?
power.’’ 11 Commission make to the Rule to (11) Conflicts With Other
II. Regulatory Review Program increase its benefits or reduce its costs? Requirements: Does the Rule overlap or
How would these modifications affect conflict with other Federal, State, or
The Commission reviews its rules and the costs and benefits of the Rule for local laws or regulations? If so, how?
guides periodically to seek information consumers? How would these Provide any evidence that supports your
about their costs and benefits, regulatory modifications affect the costs and position. With reference to the asserted
and economic impact, and general benefits of the Rule for businesses, conflicts, should the Rule be modified?
effectiveness in protecting consumers particularly small businesses? If so, why, and how? If not, why not?
and helping industry avoid deceptive (5) Impact on Information: What Are there any Rule changes necessary to
claims. These reviews assist the impact has the Rule had on the flow of help state law enforcement agencies
Commission in identifying rules and truthful information to consumers and combat deceptive practices in the
guides that warrant modification or on the flow of deceptive information to insulation market? Provide any
rescission. As part of its last review in consumers? evidence concerning whether the Rule
2005, the Commission issued several (6) Compliance: Provide any evidence has assisted in promoting national
concerning the degree of industry consistency with respect to the
E408 or another test method that provides compliance with the Rule. Does this advertising of insulation products.
comparable results. evidence indicate that the Rule should
9 44 FR at 50219–20, 50227–28 (Aug. 27, 1979). B. Specific Questions Related to the
be modified? If so, why, and how? If
10 16 CFR 460.12(c). R-Value Rule
11 The current Rule requires manufacturers and
not, why not?
other sellers to have a ‘‘reasonable basis’’ for any (7) Unnecessary Provisions: Provide (1) Aging of Cellular Plastics: Should
any evidence concerning whether any of the Commission update the required test
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energy-saving claims they make. 16 CFR 460.19.
Although the current Rule does not specify how the Rule’s provisions are no longer procedures for the aging of cellular
they must substantiate such claims, the necessary. Explain why these provisions plastic insulations under 460.5(a)(1) to
Commission explained when issuing the Rule that
scientifically reliable measurements of fuel use in are unnecessary. ensure consistency among R-value
actual houses, or reliable computer models or (8) Additional Unfair or Deceptive claims and to otherwise prevent
methods of heat flow calculations, would meet the Practices: What potentially unfair or deception? Specifically, should the
reasonable basis standard. 44 FR at 50233–34 (Aug. deceptive practices, not covered by the Commission amend the Rule to require
27, 1979). Sellers other than manufacturers can rely
on the manufacturer’s claims unless they know, or Rule, related to insulation products are ASTM 1303 (‘‘Standard Test Method for
should know, that the manufacturer lacks a Predicting Long-Term Thermal
reasonable basis for the claims. 12 70 FR 31258 (May 31, 2005). Resistance of Closed-Cell Foam

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Document Created: 2018-02-07 13:52:12
Document Modified: 2018-02-07 13:52:12

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Advance notice of proposed rulemaking; request for public comment.
Dates		Comments must be received on or before June 6, 2016.
Contact		Hampton Newsome, (202) 326-2889, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.
FR Citation		81 FR 19936
RIN Number		3084-AB40