81 FR 70935 - Rules and Regulations Under the Hobby Protection Act
FEDERAL TRADE COMMISSION Federal Register Volume 81, Issue 199 (October 14, 2016)
Federal Register Volume 81, Issue 199 (October 14, 2016)
| Page Range | 70935-70938 | |
| FR Document | 2016-24880 |
[Federal Register Volume 81, Number 199 (Friday, October 14, 2016)] [Rules and Regulations] [Pages 70935-70938] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-24880] ======================================================================= ----------------------------------------------------------------------- FEDERAL TRADE COMMISSION 16 CFR Part 304 RIN 3084-AB34 Rules and Regulations Under the Hobby Protection Act AGENCY: Federal Trade Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: As part of its regular review of all its Rules and Guides, and in response to Congressional amendments to the Hobby Protection Act (``Hobby Act'' or ``Act''), the Federal Trade Commission (``Commission'') amends its Rules and Regulations under the Hobby Protection Act (``Rules''). DATES: This rule is effective November 16, 2016. FOR FURTHER INFORMATION CONTACT: Joshua S. Millard, (202) 326-2454, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave. NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: I. Introduction As part of its ongoing regulatory review program, the Commission published a Federal Register Notice in 2014 \1\ seeking comment on the costs, benefits, and overall impact of the Rules. After the comment period closed, in December 2014, Congress enacted amendments to the Hobby Act. In response, the Commission published a Notice of Proposed Rulemaking (``NPRM'') earlier this year addressing the comments it received, proposing amendments to the Rules to track Congress' changes to the Hobby Act, and posing additional questions.\2\ The NPRM asked, in particular, whether the proposed amendments would appropriately implement Congressional changes to the Act, and what regulatory burden the proposed amendments might impose. The Commission did not receive substantive comments in response to this NPRM, and the record supports amending the Rules as proposed. Accordingly, this Notice describes the background of the Commission's regulatory review, summarizes the record, and explains the grounds for amendments to the Rules. Additionally, it provides analyses required by the Regulatory Flexibility and Paperwork Reduction Acts and sets forth the amended Rules provision. --------------------------------------------------------------------------- \1\ 79 FR 40691 (July 14, 2014). \2\ 81 FR 23219 (Apr. 20, 2016). --------------------------------------------------------------------------- II. Background On November 29, 1973, President Nixon signed the Hobby Protection Act, 15 U.S.C. 2101-2106. The Hobby Act requires manufacturers and importers of ``imitation political items'' \3\ to ``plainly and permanently'' mark them with the ``calendar year'' the items were manufactured. Id. 2101(a). The Hobby Act also requires manufacturers and importers of ``imitation numismatic items'' \4\ to ``plainly and permanently'' mark these items with the word ``copy.'' Id. 2101(b). The Act further directed the Commission to promulgate regulations for determining the ``manner and form'' that imitation political items and imitation numismatic items are to be permanently marked with the calendar year of manufacture or the word ``copy.'' Id. 2101(c). --------------------------------------------------------------------------- \3\ An imitation political item is ``an item which purports to be, but in fact is not, an original political item, or which is a reproduction, copy, or counterfeit of an original political item.'' 15 U.S.C. 2106(2). The Hobby Act defines original political items as being any political button, poster, literature, sticker or any advertisement produced for use in any political cause. Id. 2106(1). \4\ An imitation numismatic item is ``an item which purports to be, but in fact is not, an original numismatic item or which is a reproduction, copy, or counterfeit of an original numismatic item.'' 15 U.S.C. 2106(4). The Hobby Act defines original numismatic items to include coins, tokens, paper money, and commemorative medals which have been part of a coinage or issue used in exchange or used to commemorate a person or event. Id. 2106(3). --------------------------------------------------------------------------- In 1975, the Commission issued Rules and Regulations Under the Hobby Protection Act, 16 CFR part 304.\5\ The Rules track the definitions used in the [[Page 70936]] Hobby Act and implement that Act's ``plain and permanent'' marking requirements by establishing where the item should be marked, the sizes and dimensions of the letters and numerals to be used, and how to mark incusable and nonincusable items.\6\ In 1988, the Commission amended the Rules to provide additional guidance on the minimum size of letters for the word ``copy'' as a proportion of the diameter of coin reproductions.\7\ --------------------------------------------------------------------------- \5\ 40 FR 5459 (Feb. 6, 1975). \6\ Incusable items are items that can be impressed with a stamp. \7\ 53 FR 38942 (Oct. 4, 1988). Before this amendment, if a coin were too small to comply with the minimum letter size requirements, the manufacturer or importer had to request a variance from those requirements from the Commission. Because imitation miniature coins were becoming more common, the Commission determined that it was in the public interest to allow the word ``copy'' to appear on miniature imitation coins in sizes that could be reduced proportionately with the size of the item. --------------------------------------------------------------------------- The Commission reviewed the Rules in 2004. That review yielded many comments proposing that the Commission expand coverage to products beyond the scope of the Hobby Act and address problems involving the selling (or passing off) as originals of reproductions of antiques and other items not covered by the Act. However, the Commission retained the Rules without change, noting that it did not have authority under the Hobby Act to expand the Rules as requested.\8\ --------------------------------------------------------------------------- \8\ 69 FR 9943 (Mar. 3, 2004). --------------------------------------------------------------------------- In 2014, the Commission again requested public comment on the Rules' costs, benefits, and overall impact.\9\ That comment period closed on September 22, 2014. --------------------------------------------------------------------------- \9\ 79 FR 40691 (July 14, 2014). --------------------------------------------------------------------------- On December 19, 2014, President Obama signed into law H.R. 2754, the Collectible Coin Protection Act (``CCPA''), a short set of amendments to the Hobby Act. The CCPA amends the Act's scope to address not only the distribution by manufacturers and importers of imitation numismatic items, but also ``the sale in commerce'' of such items. CCPA, Public Law 113-288, section 2(1)(A) (2014). Additionally, the CCPA makes it a violation of the Hobby Act ``for a person to provide substantial assistance or support to any manufacturer, importer, or seller if that person knows or should have known that the manufacturer, importer, or seller is engaged in any act or practice'' violating the marking requirements of the Act. Public Law 113-288, section 2(1)(B).\10\ --------------------------------------------------------------------------- \10\ The CCPA also amends the Hobby Act to expand the permissible venue (i.e., location) for private actions seeking injunctions or damages for violations of the Hobby Act. Previously, a proper venue was ``any United States District Court for a district in which the defendant resides or has an agent.'' Proper venue now extends to any U.S. District Court for a district in which the defendant transacts business, or wherever venue is proper under 28 U.S.C. 1391. Public Law 113-288, section 2(2)(A)-(B). Further, the CCPA amends the Hobby Act to state that in cases of violations of the Act involving unauthorized use of a trademark of a collectible certification service, the owners of such trademarks also have rights provided under the Trademark Act of 1946, 15 U.S.C. 1116 et seq. Public Law 113-288, section 2(2)(C). --------------------------------------------------------------------------- III. Summary of Comments and Analysis A. Initial Request for Comments (2014) The Commission received six comments \11\ in response to its 2014 FRN: Four from members of the general public; one from a self- identified professional coin and paper money dealer; and one from an attorney with asserted experience pertaining to coins and other collectibles. --------------------------------------------------------------------------- \11\ The comments are available on the Commission's Web site at http://www.ftc.gov/policy/public-comments/initiative-577. --------------------------------------------------------------------------- 1. Support for the Rules All of the commenters who addressed the issue supported the Rules; none advocated rescinding them. For example, one commenter stated, ``there [is] a continuing need for the Rules as currently promulgated because . . . they do protect consumers.'' \12\ Another described the Act as ``a boon to collectors of legitimate numismatic and political items,'' and stated: ``Over the years the presence of the law and supporting regulations has provided guidance for makers of replicas.'' \13\ A dealer stated that the Act ``is a brilliant effort to help protect the consumer from fraud, and . . . is well thought of across all [l]egitimate [d]ealers.'' \14\ --------------------------------------------------------------------------- \12\ Comment of Luke Burgess, available at http://www.ftc.gov/policy/public-comments/2014/09/09/comment-00008. \13\ Comment of Roger Burdette, available at http://www.ftc.gov/policy/public-comments/2014/09/09/comment-00007; see also Comment of Kenneth Tireman of NC Coppers, available at http://www.ftc.gov/policy/public-comments/2014/07/30/comment-00004. \14\ Comment of Kenneth Tireman, supra. --------------------------------------------------------------------------- 2. Suggested Rules Modifications Some commenters suggested modifications to the Rules. In particular, several commenters suggested modifications to address ``fantasy coins,'' government-issued coins altered by non-governmental entities to bear historically impossible dates or other features marketed as novelties.\15\ Commenters variously suggested that the Commission require manufacturers of fantasy coins to stamp such items with a ``FANTASY'' mark,\16\ expressly permit the sale of such items without an identifying mark,\17\ or ban such items altogether.\18\ One commenter specifically suggested expanding the Rules' scope to incorporate the provisions of the CCPA before Congress adopted it and sent it to the President for his signature.\19\ --------------------------------------------------------------------------- \15\ See Comment of Luke Burgess, supra (offering example of Roosevelt dime altered to read ``1945,'' noting that Roosevelt dime was not introduced until 1946, and noting that such coins are not intended to be used as currency). \16\ See id. \17\ See Comment of Daniel Carr, available at http://www.ftc.gov/policy/public-comments/2014/09/17/comment-00010; Comment of Armen Vartian, available at http://www.ftc.gov/policy/public-comments/2014/09/19/comment-00011. \18\ See Comment of Luke Burgess, supra. \19\ See Comment of Armen Vartian, supra. --------------------------------------------------------------------------- 3. Analysis of Public Comments From the responses to its 2014 request for public comment, the Commission concluded that there was a continuing need for the Rules, and that the costs they impose on businesses were reasonable.\20\ Commenters who addressed the subject supported the Rules, and no dealer or business expressed the view that they should be rescinded or revised to reduce costs. Further, the Commission noted that after the comments period closed, Congress expanded the Hobby Act's scope (addressing, among others, persons who substantially assist or support manufacturers, importers, or sellers that violate the Act's marking requirements). This change evinces Congress' conclusion that the Rules did not impose undue costs upon businesses or the public. The Commission thus concluded that both the record and Congressional action supported retaining the Rules. --------------------------------------------------------------------------- \20\ 81 FR 23219, 23220. --------------------------------------------------------------------------- Additionally, the Commission found that it was unnecessary to amend the Rules to address specific collectible items (such as ``fantasy coins,'' as some commenters suggested) because it can address specific items as the need arises.\21\ Notably, the Commission has addressed whether coins resembling government-issued coins with date variations are subject to the Rules. In re Gold Bullion Int'l, Ltd., 92 F.T.C. 196 (1978). It concluded that such coins should be marked as a ``COPY'' because otherwise they could be mistaken for an original numismatic item.\22\ --------------------------------------------------------------------------- \21\ 81 FR 23220. \22\ See 92 F.T.C. at 223 (``[M]inor variations in dates between an original and its alleged `copy' are insufficient to deprive the latter of its status as a `reproduction, copy or counterfeit' of an `or[i]ginal numismatic item' and do not eliminate the requirement that the latter be marked with the word `Copy.' ''). --------------------------------------------------------------------------- [[Page 70937]] B. Notice of Proposed Rulemaking With Request for Comments (2016) While the Commission found it was unnecessary to amend the Rules to regulate specific collectible items, it observed that amendments to the Rules were necessary to bring them into harmony with Congress' expansion of the Hobby Act. Hence, in April 2016, it solicited public comment on proposed amendments to the Rules.\23\ --------------------------------------------------------------------------- \23\ 81 FR 23219, 23220, 23223. --------------------------------------------------------------------------- The Commission proposed to align its Rules with the amended Hobby Act by: (1) Extending the Rules' scope to cover persons or entities engaged in ``the sale in commerce'' of imitation numismatic items; and (2) stating that persons or entities violate the Rules if they provide substantial assistance or support to any manufacturer, importer, or seller of imitation numismatic items, or any manufacturer or importer of imitation political items, when they know, or should have known, that such person is engaged in any act or practice violating the marking requirements set forth in the Hobby Act and the Rules. The Commission solicited comment on the regulatory burden the amended Rules might impose.\24\ --------------------------------------------------------------------------- \24\ 81 FR 23220-21. --------------------------------------------------------------------------- 1. No Public Comments or Objections to Proposed Amendments The Commission received no substantive comments in response.\25\ Thus, no member of the public objected to the proposed amendments, which incorporate Congress' changes to the Hobby Act. Significantly, no commenter objected that the amendments would impose undue costs upon businesses or would not properly implement Congress' changes to the Act. As previously noted, Congress' expansion of the Hobby Act's scope appears to evince Congressional sentiment that the Act has not, and will not, impose undue costs upon businesses or the public. Having published the proposed amendments for comment and received no objection, the Commission concludes that the regulatory burden that the amendments might impose on businesses, including small businesses, is minimal. --------------------------------------------------------------------------- \25\ The Commission received six comments that were non-germane; none of these comments referred or related to the Hobby Act or Rules, the proposed amendments to the Rules, numismatic or political items, or imitations thereof. The comments expressed dissatisfaction with unwanted phone calls, used profane language, or were unintelligible. --------------------------------------------------------------------------- IV. Final Amendments The record supports modifying the Rules as the Commission proposed. As the CCPA's amendments to the Hobby Act require conforming changes in the Rules, and the record supports amending the Rules as proposed, the Commission accordingly amends the Rules' ``Applicability'' section, set forth at 16 CFR 304.3. The revised text of this provision is set forth at the end of this FRN. V. Paperwork Reduction Act The amendments to the Rules do not constitute a ``collection of information'' under the Paperwork Reduction Act, 44 U.S.C. 3501-3521 (``PRA''). The amendments incorporate changes made to the Hobby Act pursuant to the enactment of the CCPA. Prior to those changes, the Hobby Act already required manufacturers and importers of imitation political items and imitation numismatic items to mark such replica items (with the calendar year of manufacture or the word, ``copy,'' respectively) so they may be identified as replicas. The disclosure requirement under the existing Rules and the amendments are not a PRA ``collection of information'' for which ``burden'' is evaluated and estimated as they specify the wording for proper disclosure (here, the year of manufacture or the word ``copy''). See 5 CFR 1320.3(c)(2) (``The public disclosure of language of information originally supplied by the Federal government to the recipient for the purpose of disclosure to the public is not included within [the definition of a `collection of information.']''). Moreover, extending this disclosure requirement to sellers of imitation numismatic items should not increase the burden of compliance to the extent they are selling items previously marked in compliance with the Hobby Act by manufacturers or importers. The amendments do not impose any new burden upon manufacturers and importers who produce replica items covered by the Hobby Act and Rules. Nor do the amendments impose any burden beyond that imposed by the CCPA's changes to the Hobby Act. VI. Regulatory Flexibility Act The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612, requires an agency to provide an initial and final analysis of the anticipated economic impact of amendments on small entities. The RFA provides that such an analysis is not required if the agency certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 603-605. As discussed below, the Commission believes that the amendments will not have a significant economic impact upon small entities that manufacture or import imitation political items or manufacture, import, or sell imitation numismatic items, although they may affect a substantial number of small entities. In the April 2016 NPRM, the Commission's staff estimated that approximately 5,000 retailers, manufacturers, and importers of imitation numismatic items are subject to the Rules. 81 FR 23219, 23221. FTC staff further estimated that there are fewer manufacturers and importers of imitation political items, from 500 to 2,500. Id. The Commission invited members of the public to estimate how many retailers, manufacturers, and importers are subject to the Rules, and received no comments in response. Commission staff understands from a prominent political memorabilia membership organization, the American Political Items Collectors, that a disclosure that an item is an imitation is built into the manufacturing process. Entities compliant with the Rules mark replica coins with ``COPY,'' and replica political items with the date of manufacture, when those items are made. The entities subject to these burdens will be classified as small businesses if they satisfy the Small Business Administration's relevant size standards, as determined by the Small Business Size Standards component of the North American Industry Classification System (``NAICS'').\26\ Potentially relevant NAICS size standards, which are either minimum annual receipts or number of employees, are as follows: --------------------------------------------------------------------------- \26\ The standards are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. ------------------------------------------------------------------------ NAICS industry title Small business size standard ------------------------------------------------------------------------ Sign Manufacturing........................ 500 employees Fastener, Button, Needle and Pin 500 employees Manufacturing. Miscellaneous Manufacturing............... 500 employees Miscellaneous Fabricated Metal Product 750 employees Manufacturing. Rubber Product Manufacturing.............. 500 employees Miscellaneous Wood Product Manufacturing.. 500 employees Leather Good and Allied Product 500 employees Manufacturing. Commercial Printing....................... 500 employees Miscellaneous Durable Goods Merchant 100 employees Wholesalers. Book, Periodical, and Newspaper Merchant 100 employees Wholesalers. [[Page 70938]] Toy and Hobby Goods and Supplies Merchant 100 employees Wholesalers. Hobby, Toy and Game Stores................ $27.5 million Souvenir Stores........................... $7.5 million Political Organizations................... $7.5 million Electronic Shopping....................... $32.5 million Electronic Auctions....................... $38.5 million Mail-Order Houses......................... $38.5 million ------------------------------------------------------------------------ From the record of this proceeding, the Commission is unable to conclude how many of the above-listed entities qualify as small businesses. The record does not contain information regarding the size of the entities subject to the Rules. Moreover, the relevant NAICS categories include many entities that do not engage in activities covered by the Rules. Therefore, estimates of the percentage of small businesses in those categories would not necessarily reflect the percentage of small businesses subject to the Rules in those categories. Even absent this data, however, the Commission does not expect that the amendments will have a significant economic impact on small entities. As discussed above in Section V, the amendments do not impose any new costs upon persons or entities engaged in commerce concerning items that comply with the marking requirements of the Hobby Act and Rules. This document serves as notice to the Small Business Administration of the agency's certification of no effect. The Commission has nonetheless determined that it is appropriate to publish the following final regulatory flexibility analysis to ensure that the economic impact of the amendments on small entities is fully addressed. (1) Need for, and objectives of, the amendments to the Rules. As explained above, the amendments are intended to harmonize the Rules with the Hobby Act, as amended by the CCPA. Amending 16 CFR 304.3 extends the Rules' coverage to persons engaged in the sale in commerce of imitation numismatic items, and persons or entities that provide substantial assistance or support to any manufacturer, importer, or seller of covered items under certain circumstances. The legal basis for this amendment is the CCPA, which expanded the scope of the Hobby Act. (2) Significant issues raised by comments in response to the proposed amendments to the Rules. The Commission received no substantive comments from the public and no comments from the Chief Counsel for Advocacy of the Small Business Administration. Consequently, no significant issues have arisen from comments, and no changes have been made to the proposed rule in the final rule as a result of comments. (3) A description of and an estimate of the number of small entities to which the Rules will apply. As noted earlier, staff estimates that approximately 5,000 retailers, manufacturers, and importers of imitation numismatic items are subject to the Rules, and from 500 to 2,500 manufacturers and importers of imitation political items are subject to the Rules. (4) A description of the projected reporting, recordkeeping and other compliance requirements. The Rules impose a disclosure (marking) burden, currently estimated at 5 hours annually. The amendment is not expected to increase this burden on any person or entity subject to and in compliance with the Rules. The additional burden imposed by the amendment will result solely from the expanded scope of the Rules to cover certain additional persons and entities, consistent with the Hobby Act, as amended. As noted earlier, the disclosure burden imposed by the Rules is normally addressed in the manufacturing process, which requires graphic or other design skills for the die, cast, mold or other process used to manufacture the item. (5) Steps taken by the agency to minimize the significant economic impact, if any, on small entities, consistent with the stated objectives of applicable statutes. Commission staff have not identified any significant alternatives that would accomplish the statute's objectives while minimizing any significant economic impact on small entities. The amendment, as explained earlier, is intended to bring the scope of the Rules in line with the scope of the Hobby Act, as amended by the CCPA. Neither the Act nor the Rules exempt small entities, or impose lesser or different requirements on such entities. Such exemptions or alternative requirements would undermine the purpose and effect of the Act and the Rules, to the extent that Congress has determined by law that covered items, regardless of the size of the entity that manufactures, imports or sells them, require markings (i.e., disclosures) under certain circumstances for the protection of consumers who may purchase such items. List of Subjects in 16 CFR Part 304 Hobbies, Labeling, Trade practices. For the reasons set forth above, the Federal Trade Commission amends 16 CFR part 304 as follows: PART 304--RULES AND REGULATIONS UNDER THE HOBBY PROTECTION ACT 0 1. The authority citation for this part continues to read as follows: Authority: 15 U.S.C. 2101 et seq. 0 2. Revise Sec. 304.3 to read as follows: Sec. 304.3 Applicability. Any person engaged in the manufacturing, or importation into the United States for introduction into or distribution in commerce, of imitation political or imitation numismatic items shall be subject to the requirements of the Act and the regulations promulgated thereunder. Any person engaged in the sale in commerce of imitation numismatic items shall be subject to the requirements of the Act and the regulations promulgated thereunder. It shall be a violation of the Act and the regulations promulgated thereunder for a person to provide substantial assistance or support to any manufacturer, importer, or seller of imitation numismatic items, or to any manufacturer or importer of imitation political items, if that person knows or should have known that the manufacturer, importer, or seller is engaged in any practice that violates the Act and the regulations promulgated thereunder. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2016-24880 Filed 10-13-16; 8:45 am] BILLING CODE P
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(b) * * * (7) Each report of a boycott request, response, the Commission published a
(4) Reports may be submitted by mail whether submitted by mail or Notice of Proposed Rulemaking
or electronically. Mailed paper reports electronically, must be accompanied by (‘‘NPRM’’) earlier this year addressing
must be submitted in duplicate to: two copies of the relevant page(s) of any the comments it received, proposing
Report Processing Staff, Office of document(s) in which the request amendments to the Rules to track
Antiboycott Compliance, U.S. appears (see, paragraph (c)(2) of this Congress’ changes to the Hobby Act, and
Department of Commerce, Room 6098, section). For mail submissions, the posing additional questions.2 The
Washington, DC 20230. Electronic relevant pages shall be attached in paper NPRM asked, in particular, whether the
reports must be submitted in duplicate, format to the report form; for electronic proposed amendments would
by following the prompts on the screen, submissions, the relevant pages shall be appropriately implement Congressional
through the Office of Antiboycott attached in PDF format to the electronic changes to the Act, and what regulatory
Compliance Web page of the BIS Web submission. Reports, whether paper or burden the proposed amendments might
site, http://bis.doc.gov/index.php/ electronic, may also be accompanied by impose. The Commission did not
enforcement/oac?id=300. Each any additional information relating to receive substantive comments in
submission, whether paper or the request as the reporting person response to this NPRM, and the record
electronic, must be made in accordance desires to provide concerning his supports amending the Rules as
with the following requirements: response to the request. For electronic proposed. Accordingly, this Notice
(i) Where the person receiving the submissions, such additional describes the background of the
request is a United States person located information should be provided as a Commission’s regulatory review,
in the United States, each report of PDF attachment. summarizes the record, and explains the
requests must be postmarked or * * * * * grounds for amendments to the Rules.
electronically date-stamped by the last Additionally, it provides analyses
Dated: October 7, 2016.
day of the month following the calendar required by the Regulatory Flexibility
Matthew S. Borman,
quarter in which the request was and Paperwork Reduction Acts and sets
Deputy Assistant Secretary for Export forth the amended Rules provision.
received (e.g., April 30 for the quarter Administration.
consisting of January, February, and II. Background
[FR Doc. 2016–24831 Filed 10–13–16; 8:45 am]
March).
(ii) Where the person receiving the BILLING CODE 3510–33–P On November 29, 1973, President
request is a United States person located Nixon signed the Hobby Protection Act,
outside the United States, each report of 15 U.S.C. 2101–2106. The Hobby Act
requests must be postmarked or FEDERAL TRADE COMMISSION requires manufacturers and importers of
electronically date-stamped by the last ‘‘imitation political items’’ 3 to ‘‘plainly
16 CFR Part 304 and permanently’’ mark them with the
day of the second month following the
calendar quarter in which the request RIN 3084–AB34 ‘‘calendar year’’ the items were
was received (e.g., May 31 for the manufactured. Id. 2101(a). The Hobby
quarter consisting of January, February, Rules and Regulations Under the Act also requires manufacturers and
and March). Hobby Protection Act importers of ‘‘imitation numismatic
(5) Mailed paper reports may, at the items’’ 4 to ‘‘plainly and permanently’’
AGENCY: Federal Trade Commission.
reporting person’s option, be submitted mark these items with the word ‘‘copy.’’
ACTION: Final rule. Id. 2101(b). The Act further directed the
on either a single transaction form
(Form BIS–621P, Report of Request for SUMMARY: As part of its regular review Commission to promulgate regulations
Restrictive Trade Practice or Boycott, of all its Rules and Guides, and in for determining the ‘‘manner and form’’
Single Transaction, (revised 10–89)) or response to Congressional amendments that imitation political items and
on a multiple transaction form (Form to the Hobby Protection Act (‘‘Hobby imitation numismatic items are to be
BIS–6051P, Report of Request for Act’’ or ‘‘Act’’), the Federal Trade permanently marked with the calendar
Restrictive Trade Practice or Boycott, Commission (‘‘Commission’’) amends year of manufacture or the word ‘‘copy.’’
Multiple Transactions, (revised 10–89)). its Rules and Regulations under the Id. 2101(c).
Electronic reports may be submitted Hobby Protection Act (‘‘Rules’’). In 1975, the Commission issued Rules
only on the single transaction form, and Regulations Under the Hobby
DATES: This rule is effective November
which will electronically reproduce the Protection Act, 16 CFR part 304.5 The
16, 2016.
reporting person’s identifying Rules track the definitions used in the
FOR FURTHER INFORMATION CONTACT:
information to facilitate reporting of Joshua S. Millard, (202) 326–2454, 2 81 FR 23219 (Apr. 20, 2016).
multiple transactions. Bureau of Consumer Protection, Federal 3 An imitation political item is ‘‘an item which
(6) Reports, whether submitted on the Trade Commission, 600 Pennsylvania purports to be, but in fact is not, an original
paper single transaction form or on the Ave. NW., Washington, DC 20580. political item, or which is a reproduction, copy, or
paper multiple transaction form, or counterfeit of an original political item.’’ 15 U.S.C.
SUPPLEMENTARY INFORMATION: 2106(2). The Hobby Act defines original political
submitted electronically, must contain items as being any political button, poster,
entries for every applicable item on the I. Introduction
literature, sticker or any advertisement produced for
form, including whether the reporting As part of its ongoing regulatory use in any political cause. Id. 2106(1).
person intends to take or has taken the review program, the Commission 4 An imitation numismatic item is ‘‘an item
action requested. If the reporting person which purports to be, but in fact is not, an original
published a Federal Register Notice in numismatic item or which is a reproduction, copy,
has not decided what action he will take 2014 1 seeking comment on the costs, or counterfeit of an original numismatic item.’’ 15
ehiers on DSK5VPTVN1PROD with RULES
by the time the report is required to be benefits, and overall impact of the U.S.C. 2106(4). The Hobby Act defines original
filed, he must later report the action he Rules. After the comment period closed, numismatic items to include coins, tokens, paper
decides to take within 10 business days money, and commemorative medals which have
in December 2014, Congress enacted been part of a coinage or issue used in exchange or
after deciding. In addition, anyone filing amendments to the Hobby Act. In used to commemorate a person or event. Id.
a report on behalf of another must so 2106(3).
indicate and identify that other person. 1 79 FR 40691 (July 14, 2014). 5 40 FR 5459 (Feb. 6, 1975).
VerDate Sep<11>2014 13:00 Oct 13, 2016 Jkt 241001 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\14OCR1.SGM 14OCR1](https://thefederalregister.org/doc/81_FR_71134/page/1.svg)
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Hobby Act and implement that Act’s III. Summary of Comments and of fantasy coins to stamp such items
‘‘plain and permanent’’ marking Analysis with a ‘‘FANTASY’’ mark,16 expressly
requirements by establishing where the permit the sale of such items without an
A. Initial Request for Comments (2014)
item should be marked, the sizes and identifying mark,17 or ban such items
dimensions of the letters and numerals The Commission received six altogether.18 One commenter
to be used, and how to mark incusable comments 11 in response to its 2014 specifically suggested expanding the
and nonincusable items.6 In 1988, the FRN: Four from members of the general Rules’ scope to incorporate the
Commission amended the Rules to public; one from a self-identified provisions of the CCPA before Congress
provide additional guidance on the professional coin and paper money adopted it and sent it to the President
minimum size of letters for the word dealer; and one from an attorney with for his signature.19
‘‘copy’’ as a proportion of the diameter asserted experience pertaining to coins
of coin reproductions.7 and other collectibles. 3. Analysis of Public Comments
The Commission reviewed the Rules
1. Support for the Rules From the responses to its 2014 request
in 2004. That review yielded many
comments proposing that the All of the commenters who addressed for public comment, the Commission
Commission expand coverage to the issue supported the Rules; none concluded that there was a continuing
products beyond the scope of the Hobby advocated rescinding them. For need for the Rules, and that the costs
Act and address problems involving the example, one commenter stated, ‘‘there they impose on businesses were
selling (or passing off) as originals of [is] a continuing need for the Rules as reasonable.20 Commenters who
reproductions of antiques and other currently promulgated because . . . addressed the subject supported the
items not covered by the Act. However, they do protect consumers.’’ 12 Another Rules, and no dealer or business
the Commission retained the Rules described the Act as ‘‘a boon to expressed the view that they should be
without change, noting that it did not collectors of legitimate numismatic and rescinded or revised to reduce costs.
have authority under the Hobby Act to political items,’’ and stated: ‘‘Over the Further, the Commission noted that
expand the Rules as requested.8 years the presence of the law and after the comments period closed,
In 2014, the Commission again supporting regulations has provided Congress expanded the Hobby Act’s
requested public comment on the Rules’ guidance for makers of replicas.’’ 13 A scope (addressing, among others,
costs, benefits, and overall impact.9 dealer stated that the Act ‘‘is a brilliant persons who substantially assist or
That comment period closed on effort to help protect the consumer from support manufacturers, importers, or
September 22, 2014. fraud, and . . . is well thought of across sellers that violate the Act’s marking
On December 19, 2014, President all [l]egitimate [d]ealers.’’ 14 requirements). This change evinces
Obama signed into law H.R. 2754, the Congress’ conclusion that the Rules did
2. Suggested Rules Modifications
Collectible Coin Protection Act not impose undue costs upon
(‘‘CCPA’’), a short set of amendments to Some commenters suggested
businesses or the public. The
the Hobby Act. The CCPA amends the modifications to the Rules. In particular,
Commission thus concluded that both
Act’s scope to address not only the several commenters suggested
the record and Congressional action
distribution by manufacturers and modifications to address ‘‘fantasy
supported retaining the Rules.
importers of imitation numismatic coins,’’ government-issued coins altered
items, but also ‘‘the sale in commerce’’ by non-governmental entities to bear Additionally, the Commission found
of such items. CCPA, Public Law 113– historically impossible dates or other that it was unnecessary to amend the
288, section 2(1)(A) (2014). features marketed as novelties.15 Rules to address specific collectible
Additionally, the CCPA makes it a Commenters variously suggested that items (such as ‘‘fantasy coins,’’ as some
violation of the Hobby Act ‘‘for a person the Commission require manufacturers commenters suggested) because it can
to provide substantial assistance or address specific items as the need
support to any manufacturer, importer, district in which the defendant resides or has an arises.21 Notably, the Commission has
agent.’’ Proper venue now extends to any U.S. addressed whether coins resembling
or seller if that person knows or should District Court for a district in which the defendant
have known that the manufacturer, transacts business, or wherever venue is proper government-issued coins with date
importer, or seller is engaged in any act under 28 U.S.C. 1391. Public Law 113–288, section variations are subject to the Rules. In re
or practice’’ violating the marking 2(2)(A)–(B). Further, the CCPA amends the Hobby Gold Bullion Int’l, Ltd., 92 F.T.C. 196
Act to state that in cases of violations of the Act (1978). It concluded that such coins
requirements of the Act. Public Law involving unauthorized use of a trademark of a
113–288, section 2(1)(B).10 collectible certification service, the owners of such should be marked as a ‘‘COPY’’ because
trademarks also have rights provided under the otherwise they could be mistaken for an
6 Incusable items are items that can be impressed Trademark Act of 1946, 15 U.S.C. 1116 et seq. original numismatic item.22
with a stamp. Public Law 113–288, section 2(2)(C).
7 53 FR 38942 (Oct. 4, 1988). Before this 11 The comments are available on the
16 See id.
amendment, if a coin were too small to comply with Commission’s Web site at http://www.ftc.gov/
17 See Comment of Daniel Carr, available at
the minimum letter size requirements, the policy/public-comments/initiative-577.
manufacturer or importer had to request a variance 12 Comment of Luke Burgess, available at http:// http://www.ftc.gov/policy/public-comments/2014/
from those requirements from the Commission. www.ftc.gov/policy/public-comments/2014/09/09/ 09/17/comment-00010; Comment of Armen Vartian,
Because imitation miniature coins were becoming comment-00008. available at http://www.ftc.gov/policy/public-
more common, the Commission determined that it 13 Comment of Roger Burdette, available at http:// comments/2014/09/19/comment-00011.
18 See Comment of Luke Burgess, supra.
was in the public interest to allow the word ‘‘copy’’ www.ftc.gov/policy/public-comments/2014/09/09/
to appear on miniature imitation coins in sizes that comment-00007; see also Comment of Kenneth 19 See Comment of Armen Vartian, supra.
could be reduced proportionately with the size of Tireman of NC Coppers, available at http:// 20 81 FR 23219, 23220.
the item. www.ftc.gov/policy/public-comments/2014/07/30/ 21 81 FR 23220.
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8 69 FR 9943 (Mar. 3, 2004). comment-00004. 22 See 92 F.T.C. at 223 (‘‘[M]inor variations in
9 79 FR 40691 (July 14, 2014). 14 Comment of Kenneth Tireman, supra.
dates between an original and its alleged ‘copy’ are
10 The CCPA also amends the Hobby Act to 15 See Comment of Luke Burgess, supra (offering insufficient to deprive the latter of its status as a
expand the permissible venue (i.e., location) for example of Roosevelt dime altered to read ‘‘1945,’’ ‘reproduction, copy or counterfeit’ of an ‘or[i]ginal
private actions seeking injunctions or damages for noting that Roosevelt dime was not introduced until numismatic item’ and do not eliminate the
violations of the Hobby Act. Previously, a proper 1946, and noting that such coins are not intended requirement that the latter be marked with the word
venue was ‘‘any United States District Court for a to be used as currency). ‘Copy.’ ’’).
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![Federal Register / Vol. 81, No. 199 / Friday, October 14, 2016 / Rules and Regulations 70937
B. Notice of Proposed Rulemaking With Act require conforming changes in the political items or manufacture, import,
Request for Comments (2016) Rules, and the record supports or sell imitation numismatic items,
While the Commission found it was amending the Rules as proposed, the although they may affect a substantial
unnecessary to amend the Rules to Commission accordingly amends the number of small entities.
regulate specific collectible items, it Rules’ ‘‘Applicability’’ section, set forth In the April 2016 NPRM, the
observed that amendments to the Rules at 16 CFR 304.3. The revised text of this Commission’s staff estimated that
were necessary to bring them into provision is set forth at the end of this approximately 5,000 retailers,
harmony with Congress’ expansion of FRN. manufacturers, and importers of
the Hobby Act. Hence, in April 2016, it imitation numismatic items are subject
V. Paperwork Reduction Act to the Rules. 81 FR 23219, 23221. FTC
solicited public comment on proposed
The amendments to the Rules do not staff further estimated that there are
amendments to the Rules.23
The Commission proposed to align its constitute a ‘‘collection of information’’ fewer manufacturers and importers of
Rules with the amended Hobby Act by: under the Paperwork Reduction Act, 44 imitation political items, from 500 to
(1) Extending the Rules’ scope to cover U.S.C. 3501–3521 (‘‘PRA’’). The 2,500. Id. The Commission invited
persons or entities engaged in ‘‘the sale amendments incorporate changes made members of the public to estimate how
in commerce’’ of imitation numismatic to the Hobby Act pursuant to the many retailers, manufacturers, and
items; and (2) stating that persons or enactment of the CCPA. Prior to those importers are subject to the Rules, and
entities violate the Rules if they provide changes, the Hobby Act already required received no comments in response.
substantial assistance or support to any manufacturers and importers of Commission staff understands from a
manufacturer, importer, or seller of imitation political items and imitation prominent political memorabilia
imitation numismatic items, or any numismatic items to mark such replica membership organization, the American
manufacturer or importer of imitation items (with the calendar year of Political Items Collectors, that a
political items, when they know, or manufacture or the word, ‘‘copy,’’ disclosure that an item is an imitation
respectively) so they may be identified is built into the manufacturing process.
should have known, that such person is
as replicas. The disclosure requirement Entities compliant with the Rules mark
engaged in any act or practice violating
under the existing Rules and the replica coins with ‘‘COPY,’’ and replica
the marking requirements set forth in
amendments are not a PRA ‘‘collection political items with the date of
the Hobby Act and the Rules. The
of information’’ for which ‘‘burden’’ is manufacture, when those items are
Commission solicited comment on the
evaluated and estimated as they specify made. The entities subject to these
regulatory burden the amended Rules
the wording for proper disclosure (here, burdens will be classified as small
might impose.24
the year of manufacture or the word businesses if they satisfy the Small
1. No Public Comments or Objections to ‘‘copy’’). See 5 CFR 1320.3(c)(2) (‘‘The Business Administration’s relevant size
Proposed Amendments public disclosure of language of standards, as determined by the Small
The Commission received no information originally supplied by the Business Size Standards component of
substantive comments in response.25 Federal government to the recipient for the North American Industry
Thus, no member of the public objected the purpose of disclosure to the public Classification System (‘‘NAICS’’).26
to the proposed amendments, which is not included within [the definition of Potentially relevant NAICS size
incorporate Congress’ changes to the a ‘collection of information.’]’’). standards, which are either minimum
Hobby Act. Significantly, no commenter Moreover, extending this disclosure annual receipts or number of
objected that the amendments would requirement to sellers of imitation employees, are as follows:
impose undue costs upon businesses or numismatic items should not increase
would not properly implement the burden of compliance to the extent Small busi-
Congress’ changes to the Act. As they are selling items previously marked NAICS industry title ness size
in compliance with the Hobby Act by standard
previously noted, Congress’ expansion
manufacturers or importers. The
of the Hobby Act’s scope appears to Sign Manufacturing ............... 500 employ-
amendments do not impose any new
evince Congressional sentiment that the ees
burden upon manufacturers and
Act has not, and will not, impose undue Fastener, Button, Needle and 500 employ-
importers who produce replica items Pin Manufacturing. ees
costs upon businesses or the public.
covered by the Hobby Act and Rules. Miscellaneous Manufacturing 500 employ-
Having published the proposed
Nor do the amendments impose any ees
amendments for comment and received
burden beyond that imposed by the Miscellaneous Fabricated 750 employ-
no objection, the Commission concludes Metal Product Manufac- ees
CCPA’s changes to the Hobby Act.
that the regulatory burden that the turing.
amendments might impose on VI. Regulatory Flexibility Act Rubber Product Manufac- 500 employ-
businesses, including small businesses, The Regulatory Flexibility Act turing. ees
is minimal. (‘‘RFA’’), 5 U.S.C. 601–612, requires an Miscellaneous Wood Product 500 employ-
Manufacturing. ees
IV. Final Amendments agency to provide an initial and final Leather Good and Allied 500 employ-
analysis of the anticipated economic Product Manufacturing. ees
The record supports modifying the
impact of amendments on small entities. Commercial Printing .............. 500 employ-
Rules as the Commission proposed. As
The RFA provides that such an analysis ees
the CCPA’s amendments to the Hobby
is not required if the agency certifies Miscellaneous Durable 100 employ-
23 81 that the regulatory action will not have Goods Merchant Whole- ees
FR 23219, 23220, 23223. salers.
24 81 FR 23220–21. a significant economic impact on a
ehiers on DSK5VPTVN1PROD with RULES
25 The Commission received six comments that substantial number of small entities. See Book, Periodical, and News- 100 employ-
paper Merchant Whole- ees
were non-germane; none of these comments 5 U.S.C. 603–605. As discussed below, salers.
referred or related to the Hobby Act or Rules, the the Commission believes that the
proposed amendments to the Rules, numismatic or
political items, or imitations thereof. The comments
amendments will not have a significant 26 The standards are available at http://
expressed dissatisfaction with unwanted phone economic impact upon small entities www.sba.gov/sites/default/files/files/Size_
calls, used profane language, or were unintelligible. that manufacture or import imitation Standards_Table.pdf.
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![70938 Federal Register / Vol. 81, No. 199 / Friday, October 14, 2016 / Rules and Regulations
Small busi- Counsel for Advocacy of the Small For the reasons set forth above, the
NAICS industry title ness size Business Administration. Consequently, Federal Trade Commission amends 16
standard no significant issues have arisen from CFR part 304 as follows:
comments, and no changes have been
Toy and Hobby Goods and 100 employ- PART 304—RULES AND
made to the proposed rule in the final
Supplies Merchant Whole- ees REGULATIONS UNDER THE HOBBY
salers. rule as a result of comments.
Hobby, Toy and Game $27.5 million (3) A description of and an estimate PROTECTION ACT
Stores. of the number of small entities to which
the Rules will apply. ■ 1. The authority citation for this part
Souvenir Stores ..................... $7.5 million
Political Organizations ........... $7.5 million As noted earlier, staff estimates that continues to read as follows:
Electronic Shopping .............. $32.5 million approximately 5,000 retailers, Authority: 15 U.S.C. 2101 et seq.
Electronic Auctions ................ $38.5 million manufacturers, and importers of ■ 2. Revise § 304.3 to read as follows:
Mail-Order Houses ................ $38.5 million imitation numismatic items are subject
to the Rules, and from 500 to 2,500 § 304.3 Applicability.
From the record of this proceeding, manufacturers and importers of Any person engaged in the
the Commission is unable to conclude imitation political items are subject to manufacturing, or importation into the
how many of the above-listed entities the Rules. United States for introduction into or
qualify as small businesses. The record (4) A description of the projected distribution in commerce, of imitation
does not contain information regarding reporting, recordkeeping and other political or imitation numismatic items
the size of the entities subject to the compliance requirements. shall be subject to the requirements of
Rules. Moreover, the relevant NAICS The Rules impose a disclosure the Act and the regulations promulgated
categories include many entities that do (marking) burden, currently estimated at thereunder. Any person engaged in the
not engage in activities covered by the 5 hours annually. The amendment is not sale in commerce of imitation
Rules. Therefore, estimates of the expected to increase this burden on any numismatic items shall be subject to the
percentage of small businesses in those person or entity subject to and in requirements of the Act and the
categories would not necessarily reflect compliance with the Rules. The regulations promulgated thereunder. It
the percentage of small businesses additional burden imposed by the shall be a violation of the Act and the
subject to the Rules in those categories. amendment will result solely from the regulations promulgated thereunder for
Even absent this data, however, the expanded scope of the Rules to cover a person to provide substantial
Commission does not expect that the certain additional persons and entities, assistance or support to any
amendments will have a significant consistent with the Hobby Act, as manufacturer, importer, or seller of
economic impact on small entities. As amended. As noted earlier, the imitation numismatic items, or to any
discussed above in Section V, the disclosure burden imposed by the Rules manufacturer or importer of imitation
amendments do not impose any new is normally addressed in the political items, if that person knows or
costs upon persons or entities engaged manufacturing process, which requires should have known that the
in commerce concerning items that graphic or other design skills for the die, manufacturer, importer, or seller is
comply with the marking requirements cast, mold or other process used to engaged in any practice that violates the
of the Hobby Act and Rules. This manufacture the item. Act and the regulations promulgated
document serves as notice to the Small (5) Steps taken by the agency to thereunder.
Business Administration of the agency’s minimize the significant economic
By direction of the Commission.
certification of no effect. The impact, if any, on small entities,
Commission has nonetheless Donald S. Clark,
consistent with the stated objectives of
determined that it is appropriate to applicable statutes. Secretary.
publish the following final regulatory Commission staff have not identified [FR Doc. 2016–24880 Filed 10–13–16; 8:45 am]
flexibility analysis to ensure that the any significant alternatives that would BILLING CODE P
economic impact of the amendments on accomplish the statute’s objectives
small entities is fully addressed. while minimizing any significant
(1) Need for, and objectives of, the economic impact on small entities. The DEPARTMENT OF THE TREASURY
amendments to the Rules. amendment, as explained earlier, is
As explained above, the amendments intended to bring the scope of the Rules Internal Revenue Service
are intended to harmonize the Rules in line with the scope of the Hobby Act,
with the Hobby Act, as amended by the as amended by the CCPA. Neither the 26 CFR Part 1
CCPA. Amending 16 CFR 304.3 extends Act nor the Rules exempt small entities, [TD 9789]
the Rules’ coverage to persons engaged or impose lesser or different
in the sale in commerce of imitation requirements on such entities. Such RIN 1545–BM03
numismatic items, and persons or exemptions or alternative requirements
entities that provide substantial Election To Take Disaster Loss
would undermine the purpose and
assistance or support to any Deduction for Preceding Year
effect of the Act and the Rules, to the
manufacturer, importer, or seller of extent that Congress has determined by AGENCY: Internal Revenue Service (IRS),
covered items under certain law that covered items, regardless of the Treasury.
circumstances. The legal basis for this size of the entity that manufactures, ACTION: Final and temporary
amendment is the CCPA, which imports or sells them, require markings regulations.
expanded the scope of the Hobby Act. (i.e., disclosures) under certain
ehiers on DSK5VPTVN1PROD with RULES
(2) Significant issues raised by circumstances for the protection of SUMMARY: This document contains final
comments in response to the proposed consumers who may purchase such and temporary regulations relating to
amendments to the Rules. items. the election to accelerate the timing of
The Commission received no a loss sustained by a taxpayer
substantive comments from the public List of Subjects in 16 CFR Part 304 attributable to a federally declared
and no comments from the Chief Hobbies, Labeling, Trade practices. disaster. The text of the temporary
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Document Created: 2016-10-14 00:01:02
Document Modified: 2016-10-14 00:01:02
| 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 | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This rule is effective November 16, 2016. | |
| Contact | Joshua S. Millard, (202) 326-2454, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave. NW., Washington, DC 20580. | |
| FR Citation | 81 FR 70935 | |
| RIN Number | 3084-AB34 | |
| CFR Associated | Hobbies; Labeling and Trade Practices |
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