[Title 16 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2005 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



          16


          Parts 0 to 999

                         Revised as of January 1, 2005


          Commercial Practices
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of January 1, 2005
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 16:
          Chapter I--Federal Trade Commission                        3
  Finding Aids:
      Material Approved for Incorporation by Reference........     647
      Table of CFR Titles and Chapters........................     649
      Alphabetical List of Agencies Appearing in the CFR......     667
      List of CFR Sections Affected...........................     677

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                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 16 CFR 0.1 refers to 
                       title 16, part 0, section 
                       1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2005), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call 202-741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

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appearing in the Code of Federal Regulations.

INQUIRIES

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or write to the Director, Office of the Federal Register, National 
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register. The NARA site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2005.

[[Page ix]]



                               THIS TITLE

    Title 16--Commercial Practices is composed of two volumes. The first 
volume contains parts 0-999 and comprises chapter I--Federal Trade 
Commission. The second volume containing part 1000 to end comprises 
chapter II--Consumer Product Safety Commission. The contents of these 
volumes represent all current regulations codified under this title of 
the CFR as of January 1, 2005.

    For this volume, Robert J. Sheehan was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page 1]]



                     TITLE 16--COMMERCIAL PRACTICES




                   (This book contains parts 0 to 999)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Federal Trade Commission.........................           0

[[Page 3]]



                   CHAPTER I--FEDERAL TRADE COMMISSION




  --------------------------------------------------------------------

      SUBCHAPTER A--ORGANIZATION, PROCEDURES AND RULES OF PRACTICE
Part                                                                Page
0               Organization................................           7
1               General procedures..........................          11
2               Nonadjudicative procedures..................          32
3               Rules of practice for adjudicative 
                    proceedings.............................          46
4               Miscellaneous rules.........................          85
5               Standards of conduct........................         115
6               Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Federal 
                    Trade Commission........................         119
14              Administrative interpretations, general 
                    policy statements, and enforcement 
                    policy statements.......................         126
16              Advisory committee management...............         129
              SUBCHAPTER B--GUIDES AND TRADE PRACTICE RULES
17              Application of guides in preventing unlawful 
                    practices [Note]........................         136
18              Guides for the nursery industry.............         136
20              Guides for the rebuilt, reconditioned and 
                    other used automobile parts industry....         140
23              Guides for the jewelry, precious metals, and 
                    pewter industries.......................         141
24              Guides for select leather and imitation 
                    leather products........................         153
25-227

[Reserved]

233             Guides against deceptive pricing............         156
238             Guides against bait advertising.............         159
239             Guides for the advertising of warranties and 
                    guarantees..............................         160
240             Guides for advertising allowances and other 
                    merchandising payments and services.....         162
251             Guide concerning use of the word ``free'' 
                    and similar representations.............         168
254             Guides for private vocational and distance 
                    education schools.......................         170

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255             Guides concerning use of endorsements and 
                    testimonials in advertising.............         173
259             Guide concerning fuel economy advertising 
                    for new automobiles.....................         178
260             Guides for the use of environmental 
                    marketing claims........................         180
        SUBCHAPTER C--REGULATIONS UNDER SPECIFIC ACTS OF CONGRESS
300             Rules and regulations under the Wool 
                    Products Labeling Act of 1939...........         192
301             Rules and regulations under Fur Products 
                    Labeling Act............................         204
303             Rules and regulations under the Textile 
                    Fiber Products Identification Act.......         219
304             Rules and regulations under the Hobby 
                    Protection Act..........................         242
305             Rule concerning disclosures regarding energy 
                    consumption and water use of certain 
                    home appliances and other products 
                    required under the Energy Policy and 
                    Conservation Act (``Appliance Labeling 
                    Rule'').................................         243
306             Automotive fuel ratings, certification and 
                    posting.................................         317
307             Regulations under the Comprehensive 
                    Smokeless Tobacco Health Education Act 
                    of 1986.................................         323
308             Trade regulation rule pursuant to the 
                    Telephone Disclosure and Dispute 
                    Resolution Act of 1992..................         336
309             Labeling requirements for alternative fuels 
                    and alternative fueled vehicles.........         347
310             Telemarketing sales rule....................         369
311             Test procedures and labeling standards for 
                    recycled oil............................         380
312             Children's online privacy protection rule...         381
313             Privacy of consumer financial information...         388
314             Standards for safeguarding customer 
                    information.............................         408
315             Contact lens rule...........................         409
316             Rules Implementing the Can-Spam Act of 2003.         413
                  SUBCHAPTER D--TRADE REGULATION RULES
408             Unfair or deceptive advertising and labeling 
                    of cigarettes in relation to the health 
                    hazards of smoking [Note]...............         415
410             Deceptive advertising as to sizes of 
                    viewable pictures shown by television 
                    receiving sets..........................         415
423             Care labeling of textile wearing apparel and 
                    certain piece goods as amended..........         415
424             Retail food store advertising and marketing 
                    practices...............................         421

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425             Use of prenotification negative option plans         422
429             Rule concerning cooling-off period for sales 
                    made at homes or at certain other 
                    locations...............................         424
432             Power output claims for amplifiers utilized 
                    in home entertainment products..........        427?
433             Preservation of consumers' claims and 
                    defenses................................         429
435             Mail or telephone order merchandise.........         430
436             Disclosure requirements and prohibitions 
                    concerning franchising and business 
                    opportunity ventures....................         435
444             Credit practices............................         447
453             Funeral industry practices..................         449
455             Used motor vehicle trade regulation rule....         455
456             Ophthalmic practice rules (eyeglass rule)...         463
460             Labeling and advertising of home insulation.         464
    SUBCHAPTER E--RULES, REGULATIONS, STATEMENT OF GENERAL POLICY OR 
 INTERPRETATION AND EXEMPTIONS UNDER THE FAIR PACKAGING AND LABELING ACT
500             Regulations under section 4 of the Fair 
                    Packaging and Labeling Act..............         472
501             Exemptions from requirements and 
                    prohibitions under part 500.............         485
502             Regulations under section 5(c) of the Fair 
                    Packaging and Labeling Act..............         486
503             Statements of general policy or 
                    interpretation..........................         490
                 SUBCHAPTER F--FAIR CREDIT REPORTING ACT
600             Statements of general policy or 
                    interpretations.........................         494
601             Summary of consumer rights, notice of user 
                    responsibilities, and notice of 
                    furnisher responsibilities under the 
                    Fair Credit Reporting Act...............         521
602             Fair and Accurate Credit Transactions Act of 
                    2003....................................         531
603             Definitions.................................         532
604             Fair Credit Reporting Act rules.............         533
610             Free annual file disclosures................         533
611             Prohibition against circumventing treatment 
                    as a nationwide consumer reporting 
                    agency..................................         541
613             Duration of active duty alerts..............         542
614             Appropriate proof of identity...............         542
682             Disposal of consumer report information and 
                    records.................................         543
698             Summaries, notices, and forms...............         544
 SUBCHAPTER G--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
                     THE MAGNUSON-MOSS WARRANTY ACT
700             Interpretations of Magnuson-Moss Warranty 
                    Act.....................................         565

[[Page 6]]

701             Disclosure of written consumer product 
                    warranty terms and conditions...........         570
702             Pre-sale availability of written warranty 
                    terms...................................         572
703             Informal dispute settlement procedures......         574
 SUBCHAPTER H--RULES, REGULATIONS, STATEMENTS AND INTERPRETATIONS UNDER 
        THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
801             Coverage rules..............................         581
802             Exemption rules.............................         598
803             Transmittal rules...........................         614
            SUBCHAPTER I--FAIR DEBT COLLECTION PRACTICES ACT
901             Procedures for State application for 
                    exemption from the provisions of the Act         640
902-999

[Reserved]

Cross References: Animal and Plant Health Inspection Service, Department 
  of Agriculture: 9 CFR Chapter I. Commodity Futures Trading Commission: 
  17 CFR Chapter I. Consumer Product Safety Commission: 16 CFR Chapter 
  II. Securities and Exchange Commission: 17 CFR Chapter II.

Supplementary Publications: Federal Trade Commission decisions, Volumes 
  1-90 Index digest of volumes 1, 2, and 3 of decisions of the Federal 
  Trade Commission with annotation of Federal cases. Mar. 16, 1915-June 
  30, 1921. Statutes and decisions pertaining to the Federal Trade 
  Commission. 1914-1929, 1930-1938, 1939-1943, 1944-1948, 1949-1955, 
  1956-1960, 1961-1965, 1966-1970, 1971-1975, 1976, 1977.

[[Page 7]]



       SUBCHAPTER A_ORGANIZATION, PROCEDURES AND RULES OF PRACTICE





PART 0_ORGANIZATION--Table of Contents




Sec.
0.1 The Commission.
0.2 Official address.
0.3 Hours.
0.4 Laws administered.
0.5 Laws authorizing monetary claims.
0.6 [Reserved]
0.7 Delegation of functions.
0.8 The Chairman.
0.9 Organization structure.
0.10 Office of the Executive Director.
0.11 Office of the General Counsel.
0.12 Office of the Secretary.
0.13 Office of the Inspector General.
0.14 Office of Administrative Law Judges.
0.15 [Reserved]
0.16 Bureau of Competition.
0.17 Bureau of Consumer Protection.
0.18 Bureau of Economics.
0.19 The Regional Offices.

    Authority: 5 U.S.C. 552(a)(1); 15 U.S.C. 46(g).

    Source: 41 FR 54483, Dec. 14, 1976, unless otherwise noted.



Sec. 0.1  The Commission.

    The Federal Trade Commission is an independent administrative agency 
which was organized in 1915 pursuant to the Federal Trade Commission Act 
of 1914 (38 Stat. 717, as amended; 15 U.S.C. 41-58). It is responsible 
for the administration of a variety of statutes which, in general, are 
designed to promote competition and to protect the public from unfair 
and deceptive acts and practices in the advertising and marketing of 
goods and services. It is composed of five members appointed by the 
President and confirmed by the Senate for terms of seven years.



Sec. 0.2  Official address.

    The principal office of the Commission is at Washington, DC. All 
communications to the Commission should be addressed to the Federal 
Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580, 
unless otherwise specifically directed. The Commission's Web site 
address is www.ftc.gov.

[63 FR 71582, Dec. 29, 1998, as amended at 65 FR 78408, Dec. 15, 2000]



Sec. 0.3  Hours.

    Principal and field offices are open on each business day from 8:30 
a.m. to 5 p.m.



Sec. 0.4  Laws administered.

    The Commission exercises enforcement and administrative authority 
under the Federal Trade Commission Act (15 U.S.C. 41-58), Clayton Act 
(15 U.S.C. 12-27), Robinson-Patman Act (15 U.S.C. 13-13b, 21a), Webb-
Pomerene (Export Trade) Act (15 U.S.C. 61-66), Packers and Stockyards 
Act (7 U.S.C. 181-229), Wool Products Labeling Act of 1939 (15 U.S.C. 
68-68j), Lanham Trade-Mark Act (15 U.S.C. 1064), Fur Products Labeling 
Act (15 U.S.C. 69-69j), Textile Fiber Products Identification Act (15 
U.S.C. 70-70k), Federal Cigarette Labeling and Advertising Act (15 
U.S.C. 1331-1340), Fair Packaging and Labeling Act (15 U.S.C. 1451-
1461), Truth in Lending Act (15 U.S.C. 1601-1667f), Fair Credit 
Reporting Act (15 U.S.C. 1681-1681u), Fair Credit Billing Act (15 U.S.C. 
1666-1666j), Equal Credit Opportunity Act (15 U.S.C. 1691-1691f), Fair 
Debt Collection Practices Act (15 U.S.C. 1692-1692o), Electronic Fund 
Transfer Act (15 U.S.C. 1693-1693r), Hobby Protection Act (15 U.S.C. 
2101-2106), Magnuson-Moss Warranty--Federal Trade Commission Improvement 
Act (15 U.S.C. 2301-2312, 45-58), Energy Policy and Conservation Act (42 
U.S.C. 6201-6422, 15 U.S.C. 2008), Hart-Scott-Rodino Antitrust 
Improvements Act of 1976 (15 U.S.C. 18a), Petroleum Marketing Practices 
Act (15 U.S.C. 2801-2841), Comprehensive Smokeless Tobacco Health 
Education Act of 1986 (15 U.S.C. 4401-4408), Telephone Disclosure and 
Dispute Resolution Act of 1992 (15 U.S.C. 5701-5724), Telemarketing and 
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6101-6108), 
International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. 
46, 57b-1, 1311-1312, 6201 & note, 6202-6212), Credit Repair 
Organizations Act (15 U.S.C. 1679-1679j), Children's Online Privacy 
Protection Act (15 U.S.C. 6501-6506), Identity Theft Assumption and 
Deterrence Act of 1998 (18

[[Page 8]]

U.S.C. 1028 note), Gramm-Leach-Bliley Act (15 U.S.C. 6801-6809), and 
other Federal statutes.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.5  Laws authorizing monetary claims.

    The Commission is authorized to entertain monetary claims against it 
under three statutes. The Federal Tort Claims Act (28 U.S.C. 2671-2680) 
provides that the United States will be liable for injury or loss of 
property or personal injury or death caused by the negligent or wrongful 
acts or omissions of its employees acting within the scope of their 
employment or office. The Military Personnel and Civilian Employees 
Claims Act of 1964 (31 U.S.C. 3701, 3721) authorizes the Commission to 
compensate employees' claims for damage to or loss of personal property 
incident to their service. The Equal Access to Justice Act (5 U.S.C. 504 
and 28 U.S.C. 2412) provides that an eligible prevailing party other 
than the United States will be awarded fees and expenses incurred in 
connection with any adversary adjudicative and court proceeding, unless 
the adjudicative officer finds that the agency was substantially 
justified or that special circumstances make an award unjust. In 
addition, eligible parties, including certain small businesses, will be 
awarded fees and expenses incurred in defending against an agency demand 
that is substantially in excess of the final decision of the 
adjudicative officer and is unreasonable when compared with such 
decision under the facts and circumstances of the case, unless the 
adjudicative officer finds that the party has committed a willful 
violation of law or otherwise acted in bad faith, or special 
circumstances make an award unjust. Questions may be addressed to the 
Office of the General Counsel, (202) 326-2462.

[63 FR 36340, July 6, 1998]



Sec. 0.6  [Reserved]



Sec. 0.7  Delegation of functions.

    The Commission, under the authority provided by Reorganization Plan 
No. 4 of 1961, may delegate, by published order or rule, certain of its 
functions to a division of the Commission, an individual Commissioner, 
an administrative law judge, or an employee or employee board, and 
retains a discretionary right to review such delegated action upon its 
own initiative or upon petition of a party to or an intervenor in such 
action.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.8  The Chairman.

    The Chairman of the Commission is designated by the President, and, 
subject to the general policies of the Commission, is the executive and 
administrative head of the agency. He presides at meetings of and 
hearings before the Commission and participates with other Commissioners 
in all Commission decisions. Attached to the Office of the Chairman, and 
reporting directly to him, and through him to the Commission, are the 
following staff units:
    (a) The Office of Public Affairs, which furnishes information 
concerning Commission activities to news media and the public; and
    (b) the Office of Congressional Relations, which coordinates all 
liaison activities with Congress.

[50 FR 53303, Dec. 31, 1985]



Sec. 0.9  Organization structure.

    The Federal Trade Commission comprises the following principal 
units: Office of the Executive Director; Office of the General Counsel; 
Office of the Secretary; Office of the Inspector General; Office of 
Administrative Law Judges; Bureau of Competition; Bureau of Consumer 
Protection; Bureau of Economics; and the Regional Offices.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.10  Office of the Executive Director.

    The Executive Director, under the direction of the Chairman, is the 
chief operating official who develops and implements management and 
administrative policies, programs and directives for the Commission. The 
Executive Director works closely with the Bureaus on strategic planning 
and assessing the management and resource implications of any proposed 
action. In addition, the Executive Director manages the Commission's 
facilities and administrative

[[Page 9]]

services, financial management, information technology, and human 
resources.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.11  Office of the General Counsel.

    The General Counsel is the Commission's chief law officer and 
adviser, who renders necessary legal services to the Commission, 
represents the Commission in the Federal and State courts, advises the 
Commission and other agency officials and staff with respect to 
questions of law and policy, including advice with respect to 
legislative matters and ethics, and responds to requests and appeals 
filed under the Freedom of Information and Privacy Acts and to intra- 
and intergovernmental access requests.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.12  Office of the Secretary.

    The Secretary is responsible for the minutes of Commission meetings 
and is the legal custodian of the Commission's seal, property, papers, 
and records, including legal and public records. The Secretary, or in 
the Secretary's absence an Acting Secretary designated by the 
Commission, signs Commission orders and official correspondence. In 
addition, the Secretary is responsible for the publication of all 
Commission actions that appear in the Federal Register and for the 
publication of Federal Trade Commission Decisions.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.13  Office of the Inspector General.

    The Office of Inspector General (OIG) was established within the 
Federal Trade Commission in 1989 as required by the Inspector General 
Act Amendments of 1988 (5 U.S.C. app. 3). The OIG promotes the economy, 
efficiency and effectiveness of FTC programs and operations. To this 
end, the OIG independently conducts audits and investigations to find 
and prevent fraud, waste, and abuse within the agency.

[65 FR 78408, Dec. 15, 2000]



Sec. 0.14  Office of Administrative Law Judges.

    Administrative law judges are officials to whom the Commission, in 
accordance with law, delegates the initial performance of statutory 
fact-finding functions and initial rulings on conclusions of law, to be 
exercised in conformity with Commission decisions and policy directives 
and with its Rules of Practice. The administrative law judges also serve 
as presiding officers assigned to conduct rulemaking proceedings under 
section 18(a)(1)(B) of the Federal Trade Commission Act as amended and 
other rulemaking proceedings as directed. The Chief Administrative Law 
Judge also serves as the Chief Presiding Officer. Administrative law 
judges are appointed under the authority and subject to the prior 
approval of the Office of Personnel Management.

[54 FR 19885, May 9, 1989, as amended at 65 FR 78409, Dec. 15, 2000]



Sec. 0.15  [Reserved]



Sec. 0.16  Bureau of Competition.

    The Bureau is responsible for enforcing Federal antitrust and trade 
regulation laws under section 5 of the Federal Trade Commission Act, the 
Clayton Act, and a number of other special statutes that the Commission 
is charged with enforcing. The Bureau's work aims to preserve the free 
market system and assure the unfettered operation of the forces of 
supply and demand. Its activities seek to ensure price competition, 
quality products and services and efficient operation of the national 
economy. The Bureau carries out its responsibilities by investigating 
alleged law violations, and recommending to the Commission such further 
action as may be appropriate. Such action may include injunctive and 
other equitable relief in Federal district court, complaint and 
litigation before the agency's administrative law judges, formal 
nonadjudicative settlement of complaints, trade regulation rules, or 
reports. The Bureau also conducts compliance investigations and 
initiates proceedings for civil penalties to assure compliance with 
final Commission orders dealing with competition and trade restraint 
matters. The

[[Page 10]]

Bureau's activities also include business and consumer education and 
staff advice on competition laws and compliance, and liaison functions 
with respect to foreign antitrust and competition law enforcement 
agencies and organizations, including requests for international 
enforcement assistance.

[65 FR 78409, Dec. 15, 2000]



Sec. 0.17  Bureau of Consumer Protection.

    The Bureau investigates unfair or deceptive acts or practices under 
section 5 of the Federal Trade Commission Act as well as potential 
violations of numerous special statutes which the Commission is charged 
with enforcing. It prosecutes before the agency's administrative law 
judges alleged violations of law after issuance of a complaint by the 
Commission or obtains through negotiation consented-to orders, which 
must be accepted and issued by the Commission. In consultation with the 
General Counsel, the Bureau may also seek injunctive or other equitable 
relief under section 13(b) of the Federal Trade Commission Act. The 
Bureau participates in trade regulation rulemaking proceedings under 
section 18(a)(1)(B) of the Federal Trade Commission Act and other 
rulemaking proceedings under statutory authority. It investigates 
compliance with final orders and trade regulation rules and seeks civil 
penalties or consumer redress for their violation, as well as injunctive 
and other equitable relief under section 13(b) of the Act. In addition, 
the Bureau seeks to educate both consumers and the business community 
about the laws it enforces, and to assist and cooperate with other 
state, local, foreign, and international agencies and organizations in 
consumer protection enforcement and regulatory matters. The Bureau also 
maintains the agency's public reference facilities, where the public may 
inspect and copy a current index of opinions, orders, statements of 
policy and interpretations, staff manuals and instructions that affect 
any member of the public, and other public records of the Commission.

[65 FR 78409, Dec. 15, 2000]



Sec. 0.18  Bureau of Economics.

    The bureau aids and advises the Commission concerning the economic 
aspects of all of its functions, and is responsible for the preparation 
of various economic reports and surveys. The bureau provides economic 
and statistical assistance to the enforcement bureaus in the 
investigation and trial of cases.

[41 FR 54483, Dec. 14, 1976. Redesignated at 45 FR 36341, May 29, 1980, 
and amended at 50 FR 53303, Dec. 31, 1985]



Sec. 0.19  The Regional Offices.

    (a) These offices are investigatory arms of the Commission, and have 
responsibility for investigational, trial, compliance, and consumer 
educational activities as delegated by the Commission. They are under 
the general supervision of the Office of the Executive Director, and 
clear their activities through the appropriate operating Bureaus.
    (b) The names, geographic areas of responsibility, and addresses of 
the respective regional offices are as follows:
    (1) Northeast Region (located in New York City, New York), covering 
Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, 
Rhode Island, Vermont, and Puerto Rico. Federal Trade Commission, One 
Bowling Green, Suite 318, New York, New York 10004.
    (2) Southeast Region (located in Atlanta, Georgia), covering 
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, 
and Tennessee. Federal Trade Commission, Suite 5M35, Midrise Building, 
60 Forsyth Street, SW., Atlanta, Georgia 30303.
    (3) East Central Region (located in Cleveland, Ohio), covering 
Delaware, District of Columbia, Maryland, Michigan, Ohio, Pennsylvania, 
Virginia, and West Virginia. Federal Trade Commission, Eaton Center, 
Suite 200, 1111 Superior Avenue, Cleveland, Ohio 44114.
    (4) Midwest Region (located in Chicago, Illinois), covering 
Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri, 
Nebraska, North Dakota, South Dakota, and Wisconsin. Federal Trade 
Commission, 55 East Monroe Street, Suite 1860, Chicago, Illinois 60603-
5701.

[[Page 11]]

    (5) Southwest Region (located in Dallas, Texas), covering Arkansas, 
Louisiana, New Mexico, Oklahoma, and Texas. Federal Trade Commission, 
1999 Bryan Street, Suite 2150, Dallas, Texas 75201.
    (6) Northwest Region (located in Seattle, Washington), covering 
Alaska, Idaho, Montana, Oregon, Washington, and Wyoming. Federal Trade 
Commission, 915 Second Avenue, Suite 2896, Seattle, Washington 98174.
    (7) Western Region (located in San Francisco and Los Angeles, 
California), covering Arizona, California, Colorado, Hawaii, Nevada, and 
Utah.
    (i) San Francisco Office: Federal Trade Commission, 901 Market 
Street, Suite 570, San Francisco, California 94103.
    (ii) Los Angeles Office: Federal Trade Commission, 10877 Wilshire 
Boulevard, Suite 700, Los Angeles, California 90024.
    (c) Each of the regional offices is supervised by a Regional 
Director, who is available for conferences with attorneys, consumers, 
and other members of the public on matters relating to the Commission's 
activities.

[41 FR 54483, Dec. 14, 1976, as amended at 42 FR 27218, May 27, 1977; 43 
FR 754, Jan. 4, 1978; 43 FR 6579, Feb. 15, 1978. Redesignated at 45 FR 
36341, May 29, 1980, and amended at 50 FR 53303, Dec. 31, 1985; 63 FR 
71582, Dec. 29, 1998; 64 FR 71284, Dec. 21, 1999; 65 FR 78409, Dec. 15, 
2000]



PART 1_GENERAL PROCEDURES--Table of Contents




                       Subpart A_Industry Guidance

                            Advisory Opinions

Sec.
1.1 Policy.
1.2 Procedure.
1.3 Advice.
1.4 Public disclosure.

                             Industry Guides

1.5 Purpose.
1.6 How promulgated.

 Subpart B_Rules and Rulemaking Under Section 18(a)(1)(B) of the FTC Act

1.7 Scope of rules in this subpart.
1.8 Nature, authority and use of trade regulation rules.
1.9 Petitions to commence trade regulation rule proceedings.
1.10 Advance notice of proposed rulemaking.
1.11 Commencement of a rulemaking proceeding.
1.12 Final notice.
1.13 Rulemaking proceeding.
1.14 Promulgation.
1.15 Amendment or repeal of a rule.
1.16 Petition for exemption from trade regulation rule.
1.17 [Reserved]
1.18 Rulemaking record.
1.19 Modification of a rule by the Commission at the time of judicial 
          review.
1.20 Alternative procedures.

     Subpart C_Rules Promulgated Under Authority Other Than Section 
                       18(a)(1)(B) of the FTC Act

1.21 Scope of the rules in this subpart.
1.22 Rulemaking.
1.23 Quantity limit rules.
1.24 Rules applicable to wool, fur, and textile fiber products and rules 
          promulgated under the Fair Packaging and Labeling Act.
1.25 Initiation of proceedings--petitions.
1.26 Procedure.

Subpart D [Reserved]

                   Subpart E_Export Trade Associations

1.41 Limited antitrust exemption.
1.42 Notice to Commission.
1.43 Recommendations.

               Subpart F_Trademark Cancellation Procedure

1.51 Applications.

            Subpart G_Injunctive and Condemnation Proceedings

1.61 Injunctions.
1.62 Ancillary court orders pending review.
1.63 Injunctions: Wool, fur, and textile cases.
1.64 Condemnation proceedings.

        Subpart H_Administration of the Fair Credit Reporting Act

1.71 Administration.
1.72 Examination, counseling and staff advice.
1.73 Interpretations.

 Subpart I_Procedures for Implementation of the National Environmental 
                           Policy Act of 1969

1.81 Authority and incorporation of CEQ Regulations.
1.82 Declaration of policy.

[[Page 12]]

1.83 Whether to commence the process for an environmental impact 
          statement.
1.84 Draft environmental impact statements: Availability and comment.
1.85 Final environmental impact statements.
1.86 Supplemental statements.
1.87 NEPA and agency decisionmaking.
1.88 Implementing procedures.
1.89 Effect on prior actions.

         Subpart J_Economic Surveys, Investigations, and Reports

1.91 Authority and purpose.

      Subpart K_Penalties for Violation of Appliance Labeling Rules

1.92 Scope.
1.93 Notice of proposed penalty.
1.94 Commission proceeding to assess civil penalty.
1.95 Procedures upon election.
1.96 Compromise of penalty.
1.97 Amount of penalty.

 Subpart L_Civil Penalty Adjustments Under the Federal Civil Penalties 
  Inflation Adjustment Act of 1990, as Amended by the Debt Collection 
                         Improvement Act of 1996

1.98 Adjustment of civil monetary penalty amounts.

 Subpart M_Submissions Under the Small Business Regulatory Enforcement 
                              Fairness Act

1.99 Submission of rules, guides, interpretations, and policy statements 
          to Congress and the Comptroller General.

    Authority: Sec. 6, 38 Stat. 721 (15 U.S.C. 46), unless otherwise 
noted.

    Source: 32 FR 8444, June 13, 1967, unless otherwise noted.



                       Subpart A_Industry Guidance

                            Advisory Opinions



Sec. 1.1  Policy.

    (a) Any person, partnership, or corporation may request advice from 
the Commission with respect to a course of action which the requesting 
party proposes to pursue. The Commission will consider such requests for 
advice and inform the requesting party of the Commission's views, where 
practicable, under the following circumstances.
    (1) The matter involves a substantial or novel question of fact or 
law and there is no clear Commission or court precedent; or
    (2) The subject matter of the request and consequent publication of 
Commission advice is of significant public interest.
    (b) The Commission has authorized its staff to consider all requests 
for advice and to render advice, where practicable, in those 
circumstances in which a Commission opinion would not be warranted. 
Hypothetical questions will not be answered, and a request for advice 
will ordinarily be considered inappropriate where:
    (1) The same or substantially the same course of action is under 
investigation or is or has been the subject of a current proceeding 
involving the Commission or another governmental agency, or
    (2) An informed opinion cannot be made or could be made only after 
extensive investigation, clinical study, testing, or collateral inquiry.

[44 FR 21624, Apr. 11, 1979; 44 FR 23515, Apr. 20, 1979, as amended at 
54 FR 14072, Apr. 7, 1989]



Sec. 1.2  Procedure.

    (a) Application. The request for advice or interpretation should be 
submitted in writing (one original and two copies) to the Secretary of 
the Commission and should: (1) State clearly the question(s) that the 
applicant wishes resolved; (2) cite the provision of law under which the 
question arises; and (3) state all facts which the applicant believes to 
be material. In addition, the identity of the companies and other 
persons involved should be disclosed. Letters relating to unnamed 
companies or persons may not be answered. Submittal of additional facts 
may be requested prior to the rendering of any advice.
    (b) Compliance matters. If the request is for advice as to whether 
the proposed course of action may violate an outstanding order to cease 
and desist issued by the Commission, such request will be considered as 
provided for in Sec. 2.41 of this chapter.

[44 FR 21624, Apr. 11, 1979, as amended at 44 FR 40638, July 12, 1979]

[[Page 13]]



Sec. 1.3  Advice.

    (a) On the basis of the materials submitted, as well as any other 
information available, and if practicable, the Commission or its staff 
will inform the requesting party of its views.
    (b) Any advice given by the Commission is without prejudice to the 
right of the Commission to reconsider the questions involved and, where 
the public interest requires, to rescind or revoke the action. Notice of 
such rescission or revocation will be given to the requesting party so 
that he may discontinue the course of action taken pursuant to the 
Commission's advice. The Commission will not proceed against the 
requesting party with respect to any action taken in good faith reliance 
upon the Commission's advice under this section, where all the relevant 
facts were fully, completely, and accurately presented to the Commission 
and where such action was promptly discontinued upon notification of 
rescission or revocation of the Commission's approval.
    (c) Advice rendered by the staff is without prejudice to the right 
of the Commission later to rescind the advice and, where appropriate, to 
commence an enforcement proceeding.

[44 FR 21624, Apr. 11, 1979]



Sec. 1.4  Public disclosure.

    Written advice rendered pursuant to this section and requests 
therefor, including names and details, will be placed in the 
Commission's public record immediately after the requesting party has 
received the advice, subject to any limitations on public disclosure 
arising from statutory restrictions, the Commission's rules, and the 
public interest. A request for confidential treatment of information 
submitted in connection with the questions should be made separately.

[44 FR 21624, Apr. 11, 1979]

                             Industry Guides



Sec. 1.5  Purpose.

    Industry guides are administrative interpretations of laws 
administered by the Commission for the guidance of the public in 
conducting its affairs in conformity with legal requirements. They 
provide the basis for voluntary and simultaneous abandonment of unlawful 
practices by members of industry. Failure to comply with the guides may 
result in corrective action by the Commission under applicable statutory 
provisions. Guides may relate to a practice common to many industries or 
to specific practices of a particular industry.



Sec. 1.6  How promulgated.

    Industry guides \1\ are promulgated by the Commission on its own 
initiative or pursuant to petition filed with the Secretary or upon 
informal application therefor, by any interested person or group, when 
it appears to the Commission that guidance as to the legal requirements 
applicable to particular practices would be beneficial in the public 
interest and would serve to bring about more widespread and equitable 
observance of laws administered by the Commission. In connection with 
the promulgation of industry guides, the Commission at any time may 
conduct such investigations, make such studies, and hold such 
conferences or hearings as it may deem appropriate. All or any part of 
any such investigation, study, conference, or hearing may be conducted 
under the provisions of subpart A of part 2 of this chapter.
---------------------------------------------------------------------------

    \1\ In the past, certain of these have been promulgated and referred 
to as trade practice rules.
---------------------------------------------------------------------------



 Subpart B_Rules and Rulemaking Under Section 18(a)(1)(B) of the FTC Act

    Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; sec. 212(a), 
Pub. L. 104-121, 110 Stat. 857 (5 U.S.C. 601 note).



Sec. 1.7  Scope of rules in this subpart.

    The rules in this subpart apply to and govern proceedings for the 
promulgation of rules as provided in section 18(a)(1)(B) of the Federal 
Trade Commission Act. Such rules shall be known as trade regulation 
rules. All other rulemaking proceedings shall be governed by the rules 
in subpart C, except

[[Page 14]]

as otherwise required by law or as otherwise specified in this chapter.

[46 FR 26288, May, 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.8  Nature, authority and use of trade regulation rules.

    (a) For the purpose of carrying out the provisions of the Federal 
Trade Commission Act, the Commission is empowered to promulgate trade 
regulation rules which define with specificity acts or practices which 
are unfair or deceptive acts or practices in or affecting commerce. Such 
rules may include requirements prescribed for the purpose of preventing 
such acts or practices. A violation of a rule shall constitute an unfair 
or deceptive act or practice in violation of section 5(a)(1) of that 
Act, unless the Commission otherwise expressly provides in its rule. 
However, the respondent in an adjudicative proceeding may show that his 
conduct does not violate the rule or assert any other defense to which 
he is legally entitled.
    (b) The Commission at any time may conduct such investigations, make 
such studies and hold such conferences as it may deem necessary. All or 
any part of any such investigation may be conducted under the provisions 
of subpart A of part 2 of this chapter.

[46 FR 26288, May 12, 1981]



Sec. 1.9  Petitions to commence trade regulation rule proceedings.

    Trade regulation rule proceedings may be commenced by the Commission 
upon its own initiative or pursuant to written petition filed with the 
Secretary by any interested person stating reasonable grounds therefor. 
If the Commission determines to commence a trade regulation rule 
proceeding pursuant to the petition, the petitioner shall be mailed a 
copy of the public notices issued under Sec. Sec. 1.10, 1.11 and 1.12. 
Any person whose petition is not deemed by the Commission sufficient to 
warrant commencement of a rulemaking proceeding shall be notified of 
that determination and may be given an opportunity to submit additional 
data.

[46 FR 26288, May, 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.10  Advance notice of proposed rulemaking.

    (a) Prior to the commencement of any trade regulation rule 
proceeding, the Commission shall publish in the Federal Register an 
advance notice of such proposed proceeding.
    (b) The advance notice shall:
    (1) Contain a brief description of the area of inquiry under 
consideration, the objectives which the Commission seeks to achieve, and 
possible regulatory alternatives under consideration by the Commission; 
and
    (2) Invite the response of interested persons with respect to such 
proposed rulemaking, including any suggestions or alternative methods 
for achieving such objectives.
    (c) The advance notice shall be submitted to the Committee on 
Commerce, Science, and Transportation of the Senate and to the Committee 
on Interstate and Foreign Commerce of the House of Representatives.
    (d) The Commission may, in addition to publication of the advance 
notice, use such additional mechanisms as it considers useful to obtain 
suggestions regarding the content of the area of inquiry before 
publication of an initial notice of proposed rulemaking pursuant to 
Sec. 1.11.

[46 FR 26288, May, 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.11  Commencement of a rulemaking proceeding.

    (a) Initial notice. A trade regulation rule proceeding shall 
commence with an initial notice of proposed rulemaking. Such notice 
shall be published in the Federal Register not sooner than 30 days after 
it has been submitted to the Committee on Commerce, Science, and 
Transportation of the Senate and to the Committee on Interstate and 
Foreign Commerce of the House of Representatives. The initial notice 
shall include:
    (1) The text of the proposed rule including any alternatives which 
the Commission proposes to promulgate;
    (2) Reference to the legal authority under which the rule is 
proposed;
    (3) A statement describing with particularity the reason for the 
proposed rule;

[[Page 15]]

    (4) An invitation to all interested persons to propose issues which 
meet the criteria of Sec. 1.13(d)(1)(i) for consideration in accordance 
with Sec. 1.13 (d)(5) and (d)(6);
    (5) An invitation to all interested persons to comment on the 
proposed rule; and
    (6) A statement of the manner in which the public may obtain copies 
of the preliminary regulatory analysis.
    (b) Preliminary regulatory analysis. Except as otherwise provided by 
statute, the Commission shall, when commencing a rulemaking proceeding, 
issue a preliminary regulatory analysis which shall contain:
    (1) A concise statement of the need for, and the objectives of, the 
proposed rule;
    (2) A description of any reasonable alternatives to the proposed 
rule which may accomplish the stated objective of the rule in a manner 
consistent with applicable law;
    (3) For the proposed rule, and for each of the alternatives 
described in the analysis, a preliminary analysis of the projected 
benefits and any adverse economic effects and any other effects, and of 
the effectiveness of the proposed rule and each alternative in meeting 
the stated objectives of the proposed rule; and
    (4) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, if 
applicable.

[46 FR 26288, May, 12, 1981, as amended at 50 FR 53303, Dec. 31, 1985; 
63 FR 36340, July 6, 1998]



Sec. 1.12  Final notice.

    A final notice of proposed rulemaking shall be published in the 
Federal Register and, to the extent practicable, otherwise made 
available to interested persons. The final notice shall include:
    (a) Designated issues, unless there are none, which are to be 
considered in accordance with Sec. 1.13 (d)(5) and (d)(6);
    (b) The time and place of an informal hearing;
    (c) Instructions to interested persons seeking to make oral 
presentations;
    (d) A requirement that interested persons who desire to avail 
themselves of the procedures of Sec. 1.13 (d)(5) and (d)(6) with 
respect to any issue designated in paragraph (a) of this section must 
identify their interests with respect to those issues in such manner as 
may be established by the presiding officer; and
    (e) an incorporation by reference of the contents of the initial 
notice.

[40 FR 33966, Aug. 13, 1975, as amended at 50 FR 53303, Dec. 31, 1985]



Sec. 1.13  Rulemaking proceeding.

    (a) Written comments. After commencement of a trade regulation rule 
proceeding, the Commission shall accept written submissions of data, 
views, and arguments on all issues of fact, law, and policy. The initial 
notice shall specify the deadline for filing written comments under this 
subsection.
    (b) Comments proposing issues subject to the procedures of Sec. 
1.13 (d)(5) and (d)(6). Interested persons may propose issues for 
consideration in accordance with Sec. 1.13 (d)(5) and (d)(6) until 
thirty (30) days after the close of the written comment period or such 
other period as the Commission may establish in the initial notice.
    (c) Presiding officer--(1) Assignment. Upon commencement of a 
proposed trade regulation rule proceeding, a presiding officer shall be 
appointed by the Chief Presiding Officer or, when the Commission or one 
or more of its members serves as presiding officer, by the Commission.
    (2) Powers of the presiding officer. The presiding officer shall be 
responsible for the orderly conduct of the rulemaking proceeding and the 
maintenance of the rulemaking and public records until the close of the 
postrecord comment period. He shall have all powers necessary to that 
end including the following:
    (i) To publish a final notice in accordance with Sec. 1.12 or issue 
any other public notice that may be necessary for the orderly conduct of 
the rulemaking proceeding;
    (ii) To designate or modify, issues for consideration in accordance 
with Sec. 1.13 (d)(5) and (d)(6);
    (iii) To set the time and place of the informal hearing and to 
change any time periods prescribed in this subpart;

[[Page 16]]

    (iv) To prescribe rules or issue rulings to avoid unnecessary costs 
or delay. Such rules or rulings may include, but are not limited to, the 
imposition of reasonable time limits on each person's oral presentation; 
and requirements that any examination; including cross-examination, 
which a person may be entitled to conduct or have conducted be conducted 
by the presiding officer on behalf of that person in such a manner as 
the presiding officer determines to be appropriate and to be required 
for a full and true disclosure with respect to any issue designated for 
consideration in accordance with Sec. 1.13 (d)(5) and (d)(6);
    (v) To make rules and rulings limiting the representation of 
interested persons for the purpose of examination, including cross-
examination, and governing the manner in which such examination is 
limited, including the selection of a representative from among a group 
of persons with the same or similar interests;
    (vi) To require that oral presentations at the informal hearing or 
responses to written questions be under oath;
    (vii) To require that oral presentations at the informal hearing be 
submitted in writing in advance of presentation;
    (viii) To certify questions to the Commission for its determination; 
and
    (ix) To rule upon all motions or petitions of interested persons, 
which motions or petitions must be filed with the presiding officer 
until the close of the postrecord comment period.
    (3) Review of rulings by the presiding officer--(i) Review after 
certification by the presiding officer. Except as otherwise provided in 
paragraph (c)(3)(ii) of this section, applications for review of a 
ruling will not be entertained by the Commission prior to its review of 
the record pursuant to Sec. 1.14, unless the presiding officer 
certifies in writing to the Commission that a ruling involves a 
controlling question of law or policy as to which there is substantial 
ground for difference of opinion and that an immediate review of the 
ruling may materially advance the ultimate termination of the proceeding 
or subsequent review will be an inadequate remedy. Within five (5) days 
after a ruling by the presiding officer, any interested person may 
petition the presiding officer for certification of that ruling to the 
Commission. Certification of a ruling shall not stay the rulemaking 
proceeding unless the presiding officer or the Commission shall so 
order. Submissions to the Commission not to exceed fifteen (15) pages 
may be made within ten (10) days of the presiding officer's 
certification. All such filings shall be a part of the rulemaking 
record. The Commission may thereupon, in its discretion, permit the 
appeal. Commission review, if permitted, will be based on the 
application for review and any additional submissions, without oral 
argument or further briefs, unless otherwise ordered by the Commission.
    (ii) Review without certification by the presiding officer. Within 
ten (10) days after publication of the final notice, any interested 
person may petition the Commission for addition, modification or 
deletion of a designated issue, accompanied by a filing not to exceed 
fifteen (15) pages. Additional submissions on the issue by other 
interested persons, not to exceed fifteen (15) pages, may be made within 
twenty (20) days of the publication of the final notice. The Commission 
may thereupon, in its discretion, permit the appeal. Commission review, 
if permitted, will be based on the petition and any additional 
submissions, without oral argument or further briefs, unless otherwise 
ordered by the Commission. A petition hereunder shall not stay the 
rulemaking proceeding unless the presiding officer or the Commission 
shall so order. All petitions filed under this paragraph shall be a part 
of the rulemaking record. Notice of the filing of any such petition may 
be obtained from the Office of the Secretary of the Commission. In the 
event any designated issue is added or substantially modified by the 
Commission, interested persons shall be given a further opportunity to 
identify their interests with respect to those issues.
    (4) Substitution of presiding officer. In the event of the 
substitution of a new presiding officer for the one originally 
appointed, any motion predicated upon such substitution shall be made 
within five (5) days thereafter.

[[Page 17]]

    (5) Organization. In the performance of their rulemaking functions, 
presiding officers shall be responsible to the chief presiding officer 
who shall not be responsible to any other officer or employee of the 
Commission.
    (6) Ex parte communications. Except as required for the disposition 
of ex parte matters as authorized by law, no presiding officer shall 
consult any person or party with respect to any fact in issue unless 
such officer gives notice and opportunity for all parties to 
participate.
    (d) Informal hearings. An informal hearing with the opportunity for 
oral presentations on all issues shall be conducted by the presiding 
officer. In addition, if an issue is designated pursuant to these rules 
for consideration in accordance with Sec. 1.13(d) (5) and (6), the 
informal hearing on such issues shall be conducted in accordance with 
those paragraphs. For all other issues the presiding officer may in his 
discretion employ, in whole or in part, the procedures of those 
paragraphs.
    (1) Nature of issues for consideration in accordance with Sec. 1.13 
(d)(5) and (d)(6)--(i) Issues that must be considered in accordance with 
Sec. 1.13(d)(5) and (d)(6). The only issues that must be designated for 
consideration in accordance with paragraphs (d)(5) and (d)(6) of this 
section are disputed issues of fact that are determined by the 
Commission or the presiding officer to be material and necessary to 
resolve.
    (ii) Issues that may be considered in accordance with Sec. 
1.13(d)(5) and (d)((6). The Commission and the presiding officer retain 
the power to designate any other issues for consideration in accordance 
with paragraphs (d)(5) and (d)(6) of this section.
    (2) Addition or modification of issues for consideration in 
accordance with Sec. 1.13(d)(5) and (d)(6). The presiding officer may 
at any time on his own motion or pursuant to a written petition by 
interested persons, add or modify any issues designated pursuant to 
Sec. 1.12(a). No such petition shall be considered unless good cause is 
shown why any such proposed issue was not proposed pursuant to Sec. 
1.13(b).
    (3) Identification of interests. Not later than twenty (20) days 
after publication of the final notice each interested person who desires 
to avail himself of the procedures of paragraphs (d)(5) and (d)(6) of 
this section shall notify the presiding officer in writing of his 
particular interest with respect to each issue designated for 
consideration in accordance with those subsections. In the event that 
new issues are designated, each interested person shall promptly notify 
the presiding officer of his particular interest with respect to each 
such issue.
    (4) Examination and cross-examination by the presiding officer. The 
presiding officer may conduct any examination, including cross-
examination, to which a person may be entitled. For that purpose he may 
require submission of written requests for presentation of questions to 
any person making oral presentations and shall determine whether to ask 
such questions or any other questions. All requests for presentation of 
questions shall be placed in the rulemaking record.
    (5) Examination, cross-examination, and the presentation of rebuttal 
submissions by interested persons--(i) In general. The presiding officer 
shall conduct or allow to be conducted examination, including cross-
examination of oral presentations and the presentation of rebuttal 
submissions relevant to the issues designated for consideration in 
accordance with paragraphs (d)(5) and (d)(6) of this section. 
Examination, including, cross-examination, and the presentation of 
rebuttal submissions, shall be allowed to the extent to which it is 
appropriate and is required for a full and true disclosure with respect 
to those issues. Requests for an opportunity to examine, including 
cross-examine, or to present rebuttal submissions, shall be accompanied 
by a specific justification therefor. In determining whether or not to 
grant such requests, the presence of the following circumstances 
indicate that such requests should be granted:
    (A) An issue for examination including cross-examination, or the 
presentation of rebuttal submissions, is an issue of specific in 
contrast to legislative fact.
    (B) A full and true disclosure with respect to the issue can only be 
achieved through examination including cross-

[[Page 18]]

examination rather than through rebuttal submissions or the presentation 
of additional oral submissions.
    (C) Circumstantial guarantees of the trustworthiness of a 
presentation do not exist.
    (D) The particular presentation is required for the resolution of a 
designated issue.
    (ii) Selection of representatives for cross-examination. After 
consideration of the information supplied in response to the final 
notice, the presiding officer shall identify groups of persons with the 
same or similar interests in the proceeding. Any such group may be 
required to select a single representative for the purpose of 
examination, including cross-examination. If a group is unable to select 
a representative then the presiding officer may select a representative 
of each such group.
    (iii) Inability to select representative for examination, including 
cross-examination. No person shall be denied the opportunity to conduct 
or have conducted, examination, including cross-examination, under 
paragraph (d)(5)(i) of this section if he is a member of a group as 
described in paragraph (d)(5)(ii) of this section and is unable to agree 
upon group representation with other group members after a good faith 
effort to do so and seeks to present substantial and relevant issues 
which will not be adequately presented by the group representative. In 
that event he shall be allowed to conduct or have conducted any 
examination, including cross-examination, to which he is entitled on 
issues designated for consideration in accordance with paragraphs (d)(5) 
and (d)(6) of this section and which affect his particular interest.
    (6) Requests to compel the attendance of persons or the production 
of documents or to obtain responses to written questions. During the 
course of the rulemaking proceeding, the presiding officer shall 
entertain requests from the Commission's staff or any interested person 
to compel the attendance of persons or the production of documents or to 
obtain responses to written questions. Requests to compel the attendance 
of persons or the production of documents or to obtain responses to 
written questions shall contain a statement showing the general 
relevancy of the material, information or presentation, and the 
reasonableness of the scope of the request, together with a showing that 
such material, information or presentation is not available by voluntary 
methods and cannot be obtained through examination, including cross-
examination, of oral presentations or the presentation of rebuttal 
submissions, and is appropriate and required for a full and true 
disclosure with respect to the issues designated for consideration in 
accordance with paragraphs (d)(5) and (d)(6) of this section. If the 
presiding officer determines that a request should be granted, he shall 
transmit his determination to the Commission which shall determine 
whether to issue a civil investigative demand under Sec. 2.7(b). 
Information received in response to such a demand may be disclosed in 
the rulemaking proceeding subject to an in camera order under Sec. 
1.18(b).
    (e) Written transcript. A verbatim transcript shall be made of the 
informal hearing which transcript shall be placed in the rulemaking 
record.
    (f) Staff recommendations. The staff shall make recommendations to 
the Commission in a report on the rulemaking record. Such report shall 
contain its analysis of the record and its recommendations as to the 
form of the final rule.
    (g) Recommended decision. After publication of the staff report, the 
presiding officer shall make a recommended decision based upon his or 
her findings and conclusions as to all relevant and material evidence, 
and taking into account the staff report. The recommended decision shall 
be made by the presiding officer who presided over the rulemaking 
proceeding except that such recommended decision may be made by another 
officer if the officer who presided over the proceeding is no longer 
available to the Commission.
    (h) Postrecord comment. The staff report and the presiding officer's 
recommended decision shall be the subject of public comment for a period 
to be prescribed by the presiding officer at the time the recommended 
decision is placed in the rulemaking record. The comment period shall be 
no less than sixty (60) days. The comments shall be confined to 
information already in the

[[Page 19]]

record and may include requests for review by the Commission of 
determinations made by the presiding officer.
    (i) Commission review of the rulemaking record. The Commission shall 
review the rulemaking record to determine what form of rule, if any, it 
should promulgate. During this review process, the Commission may allow 
persons who have previously participated in the proceeding to make oral 
presentations to the Commission, unless it determines with respect to 
that proceeding that such presentations would not significantly assist 
it in its deliberations. Presentations shall be confined to information 
already in the rulemaking record. Requests to participate in an oral 
presentation must be received by the Commission no later than the close 
of the comment period under Sec. 1.13(h). The identity of the 
participants and the format of such presentations will be announced in 
advance by the Office of Public Information in the Commisison's Weekly 
Calendar and Notice of ``Sunshine'' Meetings and in accordance with the 
applicable provisions of 5 U.S.C. 552(b) and Sec. 4.15 of the 
Commission's Rules of Practice. Such presentations will be transcribed 
verbatim or summarized at the discretion of the Commission and a copy of 
the transcript or summary and copies of any written communications and 
summaries of any oral communications relating to such presentations 
shall be placed on the rulemaking record.

[40 FR 33966, Aug. 13, 1975, as amended at 43 FR 39084, Sept. 1, 1978; 
45 36341, May 29, 1980; 45 FR 78628, Nov. 26, 1980; 46 FR 14888, Mar. 3, 
1981; 46 FR 26288, May 12, 1981; 50 FR 53303, Dec. 31, 1985; 54 FR 
19886, May 9, 1989]



Sec. 1.14  Promulgation.

    (a) The Commission, after review of the rulemaking record, may 
issue, modify, or decline to issue any rule. Where it believes that it 
should have further information or additional views of interested 
persons, it may withhold final action pending the receipt of such 
additional information or views. If it determines not to issue a rule, 
it may adopt and publish an explanation for not doing so.
    (1) Statement of Basis and Purpose. If the Commission determines to 
promulgate a rule, it shall adopt a Statement of Basis and Purpose to 
accompany the rule which shall include:
    (i) A statement as to the prevalence of the acts or practices 
treated by the rule;
    (ii) A statement as to the manner and context in which such acts or 
practices are unfair or deceptive;
    (iii) A statement as to the economic effect of the rule, taking into 
account the effect on small businesses and consumers;
    (iv) a statement as to the effect of the rule on state and local 
laws; and
    (v) A statement of the manner in which the public may obtain copies 
of the final regulatory analysis.
    (2) Final regulatory analysis. Except as otherwise provided by 
statute, if the Commission determines to promulgate a final rule, it 
shall issue a final regulatory analysis relating to the final rule. Each 
final regulatory analysis shall contain:
    (i) A concise statement of the need for, and the objectives of, the 
final rule;
    (ii) A description of any alternatives to the final rule which were 
considered by the Commission;
    (iii) An analysis of the projected benefits and any adverse economic 
effects and any other effects of the final rule;
    (iv) An explanation of the reasons for the determination of the 
Commission that the final rule will attain its objectives in a manner 
consistent with applicable law and the reasons the particular 
alternative was chosen;
    (v) A summary of any significant issues raised by the comments 
submitted during the public comment period in response to the 
preliminary regulatory analysis, and a summary of the assessment by the 
Commission of such issues; and
    (vi) The information required by the Regulatory Flexibility Act, 5 
U.S.C. 601-612, and the Paperwork Reduction Act, 44 U.S.C. 3501-3520, if 
applicable.
    (3) Small entity compliance guide. For each rule for which the 
Commission must prepare a final regulatory flexibility analysis, the 
Commission will publish one or more guides to assist small entities in 
complying with the rule. Such guides will be designated as ``small 
entity compliance guides.''

[[Page 20]]

    (b) In the event the Commission determines, upon its review of the 
rulemaking record, to propose a revised rule for further proceedings in 
accordance with this subpart, such proceedings, including the 
opportunity of interested persons to avail themselves of the procedures 
of Sec. 1.13 (d)(5) and (d)(6), shall be limited to those portions of 
the revised rule, the subjects and issues of which were not 
substantially the subject of comment in response to a previous notice of 
proposed rulemaking.
    (c) The final rule and Statement of Basis and Purpose shall be 
published in the Federal Register. A rule issued under this subpart 
shall be deemed promulgated at 3 p.m. Eastern Standard Time on the 
fourth day after the date on which the final rule and Statement of Basis 
and Purpose are published in the Federal Register. In the event such day 
is a Saturday, Sunday or national holiday, then the rule is deemed 
promulgated at 3 p.m. Eastern Standard Time on the following business 
day.

[40 FR 33966, Aug. 13, 1975, as amended at 46 FR 26289, May 12, 1981; 50 
FR 53304, Dec. 31, 1985; 63 FR 36340, July 6, 1998]



Sec. 1.15  Amendment or repeal of a rule.

    (a) Substantive amendment or repeal of a rule. The procedures for 
substantive amendment to or repeal of a rule are the same as for the 
issuance thereof.
    (b) Nonsubstantive amendment of a rule. The Commission may make a 
nonsubstantive amendment to a rule by announcing the amendment in the 
Federal Register.

[46 FR 26289, May 12, 1981]



Sec. 1.16  Petition for exemption from trade regulation rule.

    Any person to whom a rule would otherwise apply may petition the 
Commission for an exemption from such rule. The procedures for 
determining such a petition shall be those of subpart C of these rules.

[40 FR 33966, Aug. 13, 1975]



Sec. 1.17  [Reserved]



Sec. 1.18  Rulemaking record.

    (a) Definition. For purposes of these rules the term rulemaking 
record includes the rule, its Statement of Basis and Purpose, the 
verbatim transcripts of the informal hearing, written submissions, the 
recommended decision of the presiding officer, and the staff 
recommendations as well as any public comment thereon, verbatim 
transcripts or summaries of oral presentations to the Commission any 
communications placed on the rulemaking record pursuant to Sec. 1.18c 
and any other information which the Commission considers relevant to the 
rule.
    (b) Public availability. The rulemaking record shall be publicly 
available except when the presiding officer, for good cause shown, 
determines that it is in the public interest to allow any submission to 
be received in camera subject to the provisions of Sec. 4.11 of this 
chapter.
    (c) Communications to Commissioners and Commissioners' personal 
staffs--(1) Communications by outside parties. Except as otherwise 
provided in this subpart or by the Commission, after the Commission 
votes to issue an initial notice of proposed rulemaking, comment on the 
proposed rule should be directed to the presiding officer pursuant to 
Sec. 1.13. Communications with respect to the merits of that proceeding 
from any outside party to any Commissioner or Commissioner advisor shall 
be subject to the following treatment:
    (i) Written communications. Written communications, including 
written communications from members of Congress, received within the 
period for acceptance of initial written comments shall be forwarded 
promptly to the presiding officer for placement on the rulemaking 
record. Written communications received after the time period for 
acceptance of initial written comments but prior to any other deadline 
for the acceptance of written submissions will be forwarded promptly to 
the presiding officer, who will determine whether such communications 
comply with the applicable requirements for written submissions at that

[[Page 21]]

stage of the proceeding. Communications that comply with such 
requirements will be promptly placed on the rulemaking record. 
Noncomplying communications and all communications received after the 
time periods for acceptance of written submissions will be placed 
promptly on the public record.
    (ii) Oral communications. Oral communications are permitted only 
when advance notice of such oral communications is published by the 
Commission's Office of Public Information in its Weekly Calendar and 
Notice of ``Sunshine'' Meetings and when such oral communications are 
transcribed verbatim or summarized at the discretion of the Commissioner 
or Commissioner advisor to whom such oral communications are made and 
are promptly placed on the rulemaking record together with any written 
communications and summaries of any oral communications relating to such 
oral communications. Transcripts or summaries of oral communications 
which occur after the time period for acceptance of initial written 
comments but prior to any other deadline for the acceptance of written 
submissions will be forwarded promptly to the presiding officer together 
with any written communications and summaries of any oral communications 
relating to such oral communications. The presiding officer will 
determine whether such oral communications comply with the applicable 
requirements for written submissions at that stage of the proceeding. 
Transcripts or summaries of oral communications that comply with such 
requirements will be promptly placed on the rulemaking record together 
with any written communications and summaries of any oral communications 
relating to such oral communications. Transcripts or summaries of 
noncomplying oral communications will be promptly placed on the public 
record together with any written communications and summaries of any 
oral communications relating to such oral communications. No oral 
communications are permitted subsequent to the close of the postrecord 
comment period, except as provided in Sec. 1.13(i). If an oral 
communication does otherwise occur, the Commissioner or Commissioner 
advisor will promptly place on the public record either a transcript of 
the communication or a memorandum setting forth the contents of the 
communication and the circumstances thereof; such transcript or 
memorandum will not be part of the rulemaking record.
    (iii) Congressional communications. The provisions of paragraph 
(c)(1)(ii) of this section do not apply to communications from members 
of Congress. Memoranda prepared by the Commissioner or Commissioner 
advisor setting forth the contents of any oral congressional 
communications will be placed on the public record. If the communication 
occurs within the initial comment period and is transcribed verbatim or 
summarized, the transcript or summary will be promptly placed on the 
rulemaking record. A transcript or summary of any oral communication 
which occurs after the time period for acceptance of initial written 
comments but prior to any other deadline for the acceptance of written 
submissions will be forwarded promptly to the presiding officer, who 
will determine whether such oral communication complies with the 
applicable requirements for written submissions at that stage of the 
proceeding. Transcripts or summaries of oral communications that comply 
with such requirements will be promptly placed on the rulemaking record. 
Transcripts or summaries of noncomplying oral communications will be 
placed promptly on the public record.
    (2) Communications by certain officers, employees, and agents of the 
Commission. Any officer, employee, or agent of the Commission with 
investigative or other responsibility relating to any rulemaking 
proceeding within any operating bureau of the Commission is prohibited 
from communicating or causing to be communicated to any Commissioner or 
to the personal staff of any Commissioner any fact which is relevant to 
the merits of such proceeding and which is not on the rulemaking record 
of such proceeding, unless such communication is made available to the 
public and is included in the rulemaking record. The provisions of this 
subsection shall not apply to any communication to the extent such 
communication is required for the

[[Page 22]]

disposition of ex parte matters as authorized by law.

(Sec. 6(g), 38 Stat. 721 (15 U.S.C. 46), 80 Stat. 383, as amended (5 
U.S.C. 552))

[42 FR 43974, Sept. 1, 1977, as amended at 42 FR 60563, Nov. 28, 1977; 
44 FR 16368, Mar. 19, 1979; 44 FR 21005, Apr. 9, 1979; 45 FR 78628, Nov. 
26, 1980; 50 FR 53304, Dec. 31, 1985]



Sec. 1.19  Modification of a rule by the Commission at the time of 
judicial review.

    In the event that a reviewing court determines under section 
18(e)(2) of the Federal Trade Commission Act, to allow further 
submissions and presentations on the rule, the Commission may modify or 
set aside its rule or make a new rule by reason of the additional 
submissions and presentations. Such modified or new rule shall then be 
filed with the court together with an appropriate Statement of Basis and 
Purpose and the return of such submissions and presentations.

[40 FR 33966, Aug. 13, 1975, as amended at 50 FR 53304, Dec. 31, 1985]



Sec. 1.20  Alternative procedures.

    If the Commission determines at the commencement of a rulemaking 
proceeding to employ procedures other than those established in the 
remainder of this subpart, it may do so by announcing those procedures 
in the Federal Register notice commencing the rulemaking proceeding.

[43 FR 35683, Aug. 11, 1978]



     Subpart C_Rules Promulgated Under Authority Other Than Section 
                       18(a)(1)(B) of the FTC Act

    Authority: 15 U.S.C. 46; 5 U.S.C. 552; Sec. 212(a), Pub. L. 104-121, 
110 Stat. 857 (5 U.S.C. 601 note).



Sec. 1.21  Scope of the rules in this subpart.

    This subpart sets forth procedures for the promulgation of rules 
under authority other than section 18(a)(1)(B) of the FTC Act except as 
otherwise required by law or otherwise specified in the rules of this 
chapter. This subpart does not apply to the promulgation of industry 
guides, general statements of policy, rules of agency organization, 
procedure, or practice, or rules governed by subpart B of this part.

[50 FR 53304, Dec. 31, 1985]



Sec. 1.22  Rulemaking.

    (a) Nature and authority. For the purpose of carrying out the 
provisions of the statutes administered by it, the Commission is 
empowered to promulgate rules and regulations applicable to unlawful 
trade practices. Such rules and regulations express the experience and 
judgment of the Commission, based on facts of which it has knowledge 
derived from studies, reports, investigations, hearings, and other 
proceedings, or within official notice, concerning the substantive 
requirements of the statutes which it administers.
    (b) Scope. Rules may cover all applications of a particular 
statutory provision and may be nationwide in effect, or they may be 
limited to particular areas or industries or to particular product or 
geographic markets, as may be appropriate.
    (c) Use of rules in adjudicative proceedings. When a rule is 
relevant to any issue involved in an ajudicative proceeding thereafter 
instituted, the Commission may rely upon the rule to resolve such issue, 
provided that the respondent shall have been given a fair hearing on the 
applicability of the rule to the particular case.

[40 FR 15232, Apr. 4, 1975]



Sec. 1.23  Quantity limit rules.

    Quantity limit rules are authorized by section 2(a) of the Clayton 
Act, as amended by the Robinson-Patman Act. These rules have the force 
and effect of law.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975]



Sec. 1.24  Rules applicable to wool, fur, and textile fiber products 
and rules promulgated under the Fair Packaging and Labeling Act.

    Rules having the force and effect of law are authorized under 
section 6 of the Wool Products Labeling Act of 1939, section 8 of the 
Fur Products Labeling Act, section 7 of the Textile Fiber

[[Page 23]]

Products Identification Act, and sections 4, 5, and 6 of the Fair 
Packaging and Labeling Act.

[40 FR 15233, Apr. 4, 1975]



Sec. 1.25  Initiation of proceedings--petitions.

    Proceedings for the issuance of rules or regulations, including 
proceedings for exemption of products or classes of products from 
statutory requirements, may be commenced by the Commission upon its own 
initiative or pursuant to petition filed with the Secretary by any 
interested person or group stating reasonable grounds therefor. Anyone 
whose petition is not deemed by the Commission sufficient to warrant the 
holding of a rulemaking proceeding will be promptly notified of that 
determination and given an opportunity to submit additional data. 
Procedures for the amendment or repeal of a rule or regulation are the 
same as for the issuance thereof.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975]



Sec. 1.26  Procedure.

    (a) Investigations and conferences. In connection with any 
rulemaking proceeding, the Commission at any time may conduct such 
investigations, make such studies, and hold such conferences as it may 
deem necessary. All or any part of any such investigation may be 
conducted under the provisions of subpart A of part 2 of this chapter.
    (b) Notice. General notice of proposed rulemaking will be published 
in the Federal Register and, to the extent practicable, otherwise made 
available to interested persons except when the Commission for good 
cause finds that notice and public procedure relating to the rule are 
impractical, unnecessary or contrary to the public interest and 
incorporates such finding and a brief statement of the reasons therefor 
in the rule. If the rulemaking proceeding was instituted pursuant to 
petition, a copy of the notice will be served on the petitioner. Such 
notice will include:
    (1) A statement of the time, place, and nature of the public 
proceedings;
    (2) Reference to the authority under which the rule is proposed;
    (3) Either the terms or substance of the proposed rule or 
description of the subjects and issues involved;
    (4) An opportunity for interested persons to participate in the 
proceeding through the submission of written data, views, or arguments; 
and(5) A statement setting forth such procedures for treatment of 
communications from persons not employed by the Commission to 
Commissioners or Commissioner Advisors with respect to the merits of the 
proceeding as will incorporate the requirements of Sec. 1.18(c), 
including the transcription of oral communications required by Sec. 
1.18(c)(2), adapted in such form as may be appropriate to the 
circumstances of the particular proceeding.
    (c) Oral hearings. Oral hearing on a proposed rule may be held 
within the discretion of the Commission, unless otherwise expressly 
required by law. Any such hearing will be conducted by the Commission, a 
member thereof, or a member of the Commission's staff. At the hearing 
interested persons may appear and express their views as to the proposed 
rule and may suggest such amendments, revisions, and additions thereto 
as they may consider desirable and appropriate. The presiding officer 
may impose reasonable limitations upon the length of time allotted to 
any person. If by reason of the limitations imposed the person cannot 
complete the presentation of his suggestions, he may within twenty-four 
(24) hours file a written statement covering those relevant matters 
which he did not orally present.
    (d) Promulgation of rules or orders. The Commission, after 
consideration of all relevant matters of fact, law, policy, and 
discretion, including all relevant matters presented by interested 
persons in the proceeding, will adopt and publish in the Federal 
Register an appropriate rule or order, together with a concise general 
statement of its basis and purpose and any necessary findings, or will 
give other appropriate public notice of disposition of the proceeding. 
The Federal Register publication will contain the information required 
by the Paperwork Reduction Act, 44 U.S.C. 3501-3520, and the Regulatory 
Flexibility Act, 5 U.S.C. 601-612, if applicable. For each rule for 
which

[[Page 24]]

the Commission must prepare a final regulatory flexibility analysis, the 
Commission will publish one or more guides to assist small entities in 
complying with the rule. Such guides will be designated as ``small 
entity compliance guides.''
    (e) Effective date of rules. Except as provided in paragraphs (f) 
and (g) of this section, the effective date of any rule, or of the 
amendment, suspension, or repeal of any rule will be as specified in a 
notice published in the Federal Register, which date will be not less 
than thirty (30) days after the date of such publication unless an 
earlier effective date is specified by the Commission upon good cause 
found and published with the rule.
    (f) Effective date of rules and orders under Fair Packaging and 
Labeling Act. The effective date of any rule or order under the Fair 
Packaging and Labeling Act will be as specified by order published in 
the Federal Register, but shall not be prior to the day following the 
last day on which objections may be filed under paragraph (g) of this 
section.
    (g) Objections and request for hearing under Fair Packaging and 
Labeling Act. On or before the thirtieth (30th) day after the date of 
publication of an order in the Federal Register pursuant to paragraph 
(f) of this section, any person who will be adversely affected by the 
order if placed in effect may file objections thereto with the Secretary 
of the Commission, specifying with particularity the provisions of the 
order deemed objectionable, stating the grounds therefor, and requesting 
a public hearing upon such objections. Objections will be deemed 
sufficient to warrant the holding of a public hearing only:
    (1) If they establish that the objector will be adversely affected 
by the order;
    (2) If they specify with particularity the provisions of the order 
to which objection is taken; and
    (3) If they are supported by reasonable grounds which, if valid and 
factually supported, may be adequate to justify the relief sought.

Anyone who files objections which are not deemed by the Commission 
sufficient to warrant the holding of a public hearing will be promptly 
notified of that determination. As soon as practicable after the time 
for filing objections has expired, the Commission will publish a notice 
in the Federal Register specifying those parts of the order which have 
been stayed by the filing of objections or, if no objections sufficient 
to warrant the holding of a hearing have been filed, stating that fact.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15232, Apr. 4, 1975, 
and amended at 44 FR 16368, Mar. 19, 1979; 50 FR 53304, Dec. 31, 1985; 
63 FR 36340, July 6, 1998]

Subpart D [Reserved]



                   Subpart E_Export Trade Associations



Sec. 1.41  Limited antitrust exemption.

    The Export Trade Act authorizes the organization and operation of 
export trade associations, and extends to them certain limited 
exemptions from the Sherman Act and the Clayton Act. It also extends the 
jurisdiction of the Commission under the Federal Trade Commission Act to 
unfair methods of competition used in export trade against competitors 
engaged in export trade, even though the acts constituting such unfair 
methods are done without the territorial jurisdiction of the United 
States.



Sec. 1.42  Notice to Commission.

    To obtain the exemptions afforded by the Act, an export trade 
association is required to file with the Commission, within thirty (30) 
days after its creation, a verified written statement setting forth the 
location of its offices and places of business, names, and addresses of 
its officers, stockholders, or members, and copies of its documents of 
incorporation or association. On the first day of January of each year 
thereafter, each association must file a like statement and, when 
required by the Commission to do so, must furnish to the Commission 
detailed information as to its organization, business, conduct, 
practices, management, and relation to other associations, corporations, 
partnerships, and individuals.

[[Page 25]]



Sec. 1.43  Recommendations.

    Whenever the Commission has reason to believe that an association 
has violated the prohibitions of section 2 of the Act, it may conduct an 
investigation. If, after investigation, it concludes that the law has 
been violated, it may make to such association recommendations for the 
readjustment of its business. If the association fails to comply with 
the recommendations, the Commission will refer its findings and 
recommendations to the Attorney General for appropriate action.



               Subpart F_Trademark Cancellation Procedure



Sec. 1.51  Applications.

    Applications for the institution of proceedings for the cancellation 
of registration of trade, service, or certification marks under the 
Trade-Mark Act of 1946 may be filed with the Secretary of the 
Commission. Such applications shall be in writing, signed by or in 
behalf of the applicant, and should identify the registration concerned 
and contain a short and simple statement of the facts constituting the 
alleged basis for cancellation, the name and address of the applicant, 
together with all relevant and available information. If, after 
consideration of the application, or upon its own initiative, the 
Commission concludes that cancellation of the mark may be warranted, it 
will institute a proceeding before the Commissioner of Patents for 
cancellation of the registration.



            Subpart G_Injunctive and Condemnation Proceedings



Sec. 1.61  Injunctions.

    In those cases where the Commission has reason to believe that it 
would be to the interest of the public, the Commission will apply to the 
courts for injunctive relief, pursuant to the authority granted in 
section 13 of the Federal Trade Commission Act.

[40 FR 15233, Apr. 4, 1975]



Sec. 1.62  Ancillary court orders pending review.

    Where petition for review of an order to cease and desist has been 
filed in a U.S. court of appeals, the Commission may apply to the court 
for issuance of such writs as are ancillary to its jurisdiction or are 
necessary in its judgment to prevent injury to the public or to 
competitors pendente lite.



Sec. 1.63  Injunctions: Wool, fur, and textile cases.

    In those cases arising under the Wool Products Labeling Act of 1939, 
Fur Products Labeling Act, and Textile Fiber Products Identification 
Act, where it appears to the Commission that it would be to the public 
interest for it to do so, the Commission will apply to the courts for 
injunctive relief, pursuant to the authority granted in such Acts.

[32 FR 8444, June 13, 1967, as amended at 41 FR 4814, Feb. 2, 1976]



Sec. 1.64  Condemnation proceedings.

    In those cases arising under the Wool Products Labeling Act of 1939 
and Fur Products Labeling Act, and where it appears to the Commission 
that the public interest requires such action, the Commission will apply 
to the courts for condemnation, pursuant to the authority granted in 
such Acts.

[32 FR 8444, June 13, 1967, as amended at 41 FR 4814, Feb. 2, 1976]



        Subpart H_Administration of the Fair Credit Reporting Act

    Authority: 84 Stat. 1128, 15 U.S.C. 1681 et seq.



Sec. 1.71  Administration.

    The general administration of the Fair Credit Reporting Act (Title 
VI of the Consumer Credit Protection Act of 1968; enacted October 26, 
1970; Pub. L. 91-508, 82 Stat. 146, 15 U.S.C. 1601 et seq.) is carried 
out by the Bureau of Consumer Protection, Division of Credit Practices. 
Any interested person may

[[Page 26]]

obtain copies of the Act and these procedures and rules of practice upon 
request to the Secretary of the Commission, Washington, DC 20580.

[36 FR 9293, May 22, 1971, as amended at 36 FR 18788, Sept. 22, 1971; 38 
FR 32438, Nov. 26, 1973; 46 FR 26290, May 12, 1981]



Sec. 1.72  Examination, counseling and staff advice.

    The Commission maintains a staff to carry out on-the-scene 
examination of records and procedures utilized to comply with the Fair 
Credit Reporting Act and to carry out industry counseling. Requests for 
staff interpretation of the Fair Credit Reporting Act should be directed 
to the Division of Credit Practices, Bureau of Consumer Protection. Such 
interpretations represent informal staff opinion which is advisory in 
nature and is not binding upon the Commission as to any action it may 
take in the matter. Administrative action to effect correction of minor 
infractions on a voluntary basis is taken in those cases where such 
procedure is believed adequate to effect immediate compliance and 
protect the public interest.

[36 FR 9293, May 22, 1971, as amended at 36 FR 18788, Sept. 22, 1971; 38 
FR 32438, Nov. 26, 1973; 46 FR 26290, May 12, 1981]



Sec. 1.73  Interpretations.

    (a) Nature and purpose. (1) The Commission issues and causes to be 
published in the Federal Register interpretations of the provisions of 
the Fair Credit Reporting Act on its own initiative or pursuant to the 
application of any person when it appears to the Commission that 
guidance as to the legal requirements of the Act would be in the public 
interest and would serve to bring about more widespread and equitable 
observance of the Act.
    (2) The interpretations are not substantive rules and do not have 
the force or effect of statutory provisions. They are guidelines 
intended as clarification of the Fair Credit Reporting Act, and, like 
industry guides, are advisory in nature. They represent the Commission's 
view as to what a particular provision of the Fair Credit Reporting Act 
means for the guidance of the public in conducting its affairs in 
conformity with that Act, and they provide the basis for voluntary and 
simultaneous abandonment of unlawful practices by members of industry. 
Failure to comply with such interpretations may result in corrective 
action by the Commission under applicable statutory provisions.
    (b) Procedure. (1) Requests for Commission interpretations should be 
submitted in writing to the Secretary of the Federal Trade Commission 
stating the nature of the interpretation requested and the reasons and 
justification therefor. If the request is granted, as soon as 
practicable thereafter, the Commission will publish a notice in the 
Federal Register setting forth the text of the proposed interpretation. 
Comments, views, or objections, together with the grounds therefor, 
concerning the proposed interpretation may be submitted to the Secretary 
of the Commission within thirty (30) days of public notice thereof. The 
proposed interpretation will automatically become final after the 
expiration of sixty (60) days from the date of public notice thereof, 
unless upon consideration of written comments submitted as hereinabove 
provided, the Commission determine to rescind, revoke, modify, or 
withdraw the proposed interpretation, in which event notification of 
such determination will be published in the Federal Register.
    (2) The issuance of such interpretations is within the discretion of 
the Commission and the Commission at any time may conduct such 
investigations and hold such conferences or hearings as it may deem 
appropriate. Any interpretation issued pursuant to this chapter is 
without prejudice to the right of the Commission to reconsider the 
interpretation, and where the public interest requires, to rescind, 
revoke, modify, or withdraw the interpretation, in which event 
notification of such action will be published in the Federal Register.
    (c) Applicability of interpretations. Interpretations issued 
pursuant to this subpart may cover all applications of a particular 
statutory provision, or they may be limited in application to a 
particular industry, as appropriate.

[36 FR 9293, May 22, 1971]

[[Page 27]]



 Subpart I_Procedures for Implementation of the National Environmental 
                           Policy Act of 1969

    Authority: 15 U.S.C. 46(g), 42 U.S.C. 4321 et seq.

    Source: 47 FR 3096, Jan. 22, 1982, unless otherwise noted.



Sec. 1.81  Authority and incorporation of CEQ Regulations.

    This subpart is issued pursuant to 102(2) of the National 
Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et 
seq.). Pursuant to Executive Order 11514 (March 5, 1970, as amended by 
Executive Order 11991, May 24, 1977) and the Environmental Quality 
Improvement Act of 1980, as amended (42 U.S.C. 4371 et seq.) the Council 
on Environmental Quality (CEQ) has issued comprehensive regulations for 
implementing the procedural provisions of NEPA (40 CFR parts 1500 
through 1508) (``CEQ Regulations''). Although it is the Commission's 
position that these regulations are not binding on it, the Commission's 
policy is to comply fully with the CEQ Regulations unless it determines 
in a particular instance or for a category of actions that compliance 
would not be consistent with the requirements of law. With this caveat, 
the Commission incorporates into this subpart the CEQ Regulations. The 
following are supplementary definitions and procedures to be applied in 
conjunction with the CEQ Regulations.

[47 FR 3096, Jan. 22, 1982, as amended at 50 FR 53304, Dec. 31, 1985]



Sec. 1.82  Declaration of policy.

    (a) Except for actions which are not subject to the requirements of 
section 102(2)(C) of NEPA, no Commission proposal for a major action 
significantly affecting the quality of the human environment will be 
instituted unless an environmental impact statement has been prepared 
for consideration in the decisionmaking. All relevant environmental 
documents, comments, and responses as provided in this subpart shall 
accompany such proposal through all review processes. ``Major actions, 
significantly affecting the quality of the human environment'' referred 
to in this subpart ``do not include bringing judicial or administrative 
civil or criminal enforcement actions'' CEQ Regulation (40 CFR 
1508.18(a)). In the event that the Commission in an administrative 
enforcement proceeding actively contemplates the adoption of standards 
or a form of relief which it determines may have a significant effect on 
the environment, the Commission will, when consistent with the 
requirements of law, provide for the preparation of an environmental 
assessment or an environmental impact statement or such other action as 
will permit the Commission to assess alternatives with a view toward 
avoiding or minimizing any adverse effect upon the environment.
    (b) No Commission proposal for legislation significantly affecting 
the quality of the human environment and concerning a subject matter in 
which the Commission has primary responsibility will be submitted to 
Congress without an accompanying environmental impact statement.
    (c) When the Commission finds that emergency action is necessary and 
an environmental impact statement cannot be prepared in conformance with 
the CEQ Regulations, the Commission will consult with CEQ about 
alternative arrangements in accordance with CEQ Regulation (40 CFR 
1506.11).



Sec. 1.83  Whether to commence the process for an environmental impact 
statement.

    (a) The Bureau responsible for submitting a proposed rule, guide, or 
proposal for legislation to the Commission for agency action shall, 
after consultation with the Office of the General Counsel, initially 
determine whether or not the proposal is one which requires an 
environmental impact statement. Except for matters where the 
environmental effects, if any, would appear to be either (1) clearly 
significant and therefore the decision is made to prepare an 
environmental impact statement, or (2) so uncertain that environmental 
analysis would be based on speculation, the Bureau should normally 
prepare an ``environmental assessment'' CEQ Regulation (40 CFR

[[Page 28]]

1508.9) for purposes of providing sufficient evidence and analysis for 
determining whether to prepare an environmental impact statement or a 
finding of no significant impact. The Bureau should involve 
environmental agencies to the extent practicable in preparing an 
assessment. An environmental assessment shall be made available to the 
public when the proposed action is made public along with any ensuing 
environmental impact statement or finding of no significant impact.
    (b) If the Bureau determines that the proposal is one which requires 
an environmental impact statement, it shall commence the ``scoping 
process'' CEQ Regulation (40 CFR 1501.7) except that the impact 
statement which is part of a proposal for legislation need not go 
through a scoping process but shall conform to CEQ Regulation (40 CFR 
1506.8). As soon as practicable after its decision to prepare an 
environmental impact statement and before the scoping process, the 
Bureau shall publish a notice of intent as provided in CEQ Regulations 
(40 CFR 1501.7 and 1508.22).
    (c) If, on the basis of an environmental assessment, the 
determination is made not to prepare a statement, a finding of ``no 
significant impact'' shall be made in accordance with CEQ Regulation (40 
CFR 1508.3) and shall be made available to the public as specified in 
CEQ Regulation (40 CFR 1506.6).



Sec. 1.84  Draft environmental impact statements: Availability and 
comment.

    Except for proposals for legislation, environmental impact 
statements shall be prepared in two stages: Draft statement and final 
statement.
    (a) Proposed rules or guides. (1) An environmental impact statement, 
if deemed necessary, shall be in draft form at the time a proposed rule 
or guide is published in the Federal Register and shall accompany the 
proposal throughout the decisionmaking process.
    (2) The major decision points with respect to rules and guides are:
    (i) Preliminary formulation of a staff proposal;
    (ii) The time the proposal is initially published in the Federal 
Register as a Commission proposal;
    (iii) Presiding officer's report (in trade regulation rule 
proceedings);
    (iv) Submission to the Commission of the staff report or 
recommendation for final action on the proposed guide or rule;
    (v) Final decision by the Commission. The decision on whether or not 
to prepare an environmental impact statement should occur at point 
(a)(2)(i) of this section. The publication of any draft impact statement 
should occur at point (a)(2)(ii) of this section. The publication of the 
final environmental impact statement should occur at point (a)(2)(iv) of 
this section.
    (b) Legislative proposals. In legislative matters, a legislative 
environmental impact statement shall be prepared in accordance with CEQ 
Regulation (40 CFR 1506.8).
    (c) In rule or guide proceedings the draft environmental impact 
statement shall be prepared in accordance with CEQ Regulation (40 CFR 
1502.9) and shall be placed in the public record to which it pertains; 
in legislative matters, the legislative impact statement shall be placed 
in a public record to be established, containing the legislative report 
to which it pertains; these will be available to the public through the 
Office of the Secretary and will be published in full with the 
appropriate proposed rule, guide, or legislative report; such statements 
shall also be filed with the Environmental Protection Agency's (EPA) 
Office of Environmental Review (CEQ Regulation (40 CFR 1506.9)) for 
listing in the weekly Federal Register Notice of draft environmental 
impact statements, and shall be circulated, in accordance with CEQ 
Regulations (40 CFR 1502.19, 1506.6) to appropriate federal, state and 
local agencies.
    (d) Forty-five (45) days will be allowed for comment on the draft 
environmental impact statement, calculated from the date of publication 
in the EPA's weekly Federal Register list of draft environmental impact 
statements. The Commission may in its discretion grant such longer 
period as the complexity of the issues may warrant.

[[Page 29]]



Sec. 1.85  Final environmental impact statements.

    (a) After the close of the comment period, the Bureau responsible 
for the matter will consider the comments received on the draft 
environmental impact statement and will put the draft statement into 
final form in accordance with the requirements of CEQ Regulation (40 CFR 
1502.9(b)), attaching the comments received (or summaries if response 
was exceptionally voluminous).
    (b) Upon Bureau approval of the final environmental impact statement 
the final statement will be
    (1) Filed with the EPA;
    (2) Forwarded to all parties which commented on the draft 
environmental impact statement and to other interested parties, if 
practicable;
    (3) Placed in the public record of the proposed rule or guide 
proceeding or legislative matter to which it pertains;
    (4) Distributed in any other way which the Bureau in consultation 
with CEQ deems appropriate.
    (c) In rule and guide proceedings, at least thirty (30) days will be 
allowed for comment on the final environmental impact statement, 
calculated from the date of publication in the EPA's weekly Federal 
Register list of final environmental impact statements. In no event will 
a final rule or guide be promulgated prior to ninety (90) days after 
notice of the draft environmental impact statement, except where 
emergency action makes such time period impossible.



Sec. 1.86  Supplemental statements.

    Except for proposals for legislation, as provided in CEQ Regulation 
(40 CFR 1502.9(c)), the Commission shall publish supplements to either 
draft or final environmental statements if:
    (a) The Commission makes substantial changes in the proposed action 
that are relevant to environmental concerns; or
    (b) There are significant new circumstances or information relevant 
to environmental concerns and bearing on the proposed action and its 
impacts. In the course of a trade regulation rule proceeding, the 
supplement will be placed in the rulemaking record.



Sec. 1.87  NEPA and agency decisionmaking.

    In its final decision on the proposed action or, if appropriate, in 
its recommendation to Congress, the Commission shall consider all the 
alternatives in the environmental impact statement and other relevant 
environmental documents and shall prepare a concise statement which, in 
accordance with CEQ Regulation Sec. 1505.2, shall:
    (a) Identify all alternatives considered by the Commission in 
reaching its decision or recommendation, specifying the alternatives 
which were considered to be environmentally preferable;
    (b) State whether all practicable means to avoid or minimize 
environmental harm from the alternative selected have been adopted, and 
if not, why they were not.



Sec. 1.88  Implementing procedures.

    (a) The General Counsel is designated the official responsible for 
coordinating the Commission's efforts to improve environmental quality. 
He will provide assistance to the staff in determining when an 
environmental impact statement is needed and in its preparation.
    (b) The Commission will determine finally whether an action complies 
with NEPA.
    (c) The Directors of the Bureaus of Consumer Protection and 
Competition will supplement these procedures for their Bureaus to assure 
that every proposed rule and guide is reviewed to assess the need for an 
environmental impact statement and that, where need exists, an 
environmental impact statement is developed to assure timely 
consideration of environmental factors.
    (d) The General Counsel will establish procedures to assure that 
every legislative proposal on a matter for which the Commission has 
primary responsibility is reviewed to assess the need for an 
environmental impact statement and that, where need exists, and 
environmental impact statement is developed to assure timely 
consideration of environmental factors.
    (e) Parties seeking information or status reports on environmental 
impact statements and other elements of

[[Page 30]]

the NEPA process, should contact the Assistant General Counsel for 
Litigation and Environmental Policy.



Sec. 1.89  Effect on prior actions.

    It is the policy of the Commission to apply these procedures to the 
fullest extent possible to proceedings which are already in progress.



         Subpart J_Economic Surveys, Investigations and Reports



Sec. 1.91  Authority and purpose.

    General and special economic surveys, investigations, and reports 
are made by the Bureau of Economics under the authority of the various 
laws which the Federal Trade Commission administers. The Commission may 
in any such survey or investigation invoke any or all of the compulsory 
processes authorized by law.

[32 FR 8444, June 13, 1967. Redesignated at 40 FR 15233, Apr. 4, 1975]



      Subpart K_Penalties for Violation of Appliance Labeling Rules

    Source: 45 FR 67318, Oct. 10, 1980, unless otherwise noted.



Sec. 1.92  Scope.

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



Sec. 1.93  Notice of proposed penalty.

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



Sec. 1.94  Commission proceeding to assess civil penalty.

    If the respondent fails to elect to have the procedures of Sec. 
1.95 apply, the Commission shall determine whether to issue a complaint 
and thereby commence an adjudicative proceeding in conformance with 
section 333(d)(2)(A) of the Energy Policy and Conservation Act, 42 
U.S.C. 6303(d)(2)(A). If the Commission votes to issue a complaint, the 
proceeding shall be conducted in accordance with subparts B, C, D, E and 
F of part 3 of this chapter, unless otherwise ordered in the notice of 
proposed penalty. In assessing a penalty, the Commission shall take into 
account the factors listed in Sec. 1.97.



Sec. 1.95  Procedures upon election.

    (a) After receipt of the notification of election to apply the 
procedures of this section pursuant to Sec. 1.93, the Commission shall 
promptly assess such penalty as it deems appropriate, in accordance with 
Sec. 1.97.
    (b) If the civil penalty has not been paid within 60 calendar days 
after the assessment order has been issued under paragraph (a) of this 
section, the General Counsel, unless otherwise directed,

[[Page 31]]

shall institute an action in the appropriate district court of the 
United States for an order enforcing the assessment of the civil 
penalty.
    (c) Any election to have this section apply may not be revoked 
except with the consent of the Commission.



Sec. 1.96  Compromise of penalty.

    The Commission may compromise any penalty or proposed penalty at any 
time, with leave of court when necessary, taking into account the nature 
and degree of violation and the impact of a penalty upon a particular 
respondent.



Sec. 1.97  Amount of penalty.

    All penalties assessed under this subchapter shall be in the amount 
per violation as described in section 333(a) of the Energy Policy and 
Conservation Act, 42 U.S.C. 6303(a), adjusted for inflation pursuant to 
Sec. 1.98, unless the Commission otherwise directs. In considering the 
amount of penalty, the Commission shall take into account:
    (a) Respondent's size and ability to pay;
    (b) Respondent's good faith;
    (c) Any history of previous violations;
    (d) The deterrent effect of the penalty action;
    (e) The length of time involved before the Commission was made aware 
of the violation;
    (f) The gravity of the violation, including the amount of harm to 
consumers and the public caused by the violation; and
    (g) Such other matters as justice may require.

[32 FR 8444, June 13, 1967, as amended at 61 FR 54548, Oct. 21, 1996]



 Subpart L_Civil Penalty Adjustments Under the Federal Civil Penalties 
 
 Inflation Adjustment Act of 1990, as Amended by the Debt Collection 
                         Improvement Act of 1996

    Authority: 28 U.S.C. 2461 note.

    Source: 61 FR 54549, Oct. 21, 1996, unless otherwise noted.



Sec. 1.98   Adjustment of civil monetary penalty amounts.

    This section makes inflation adjustments in the dollar amounts of 
civil monetary penalties provided by law within the Commission's 
jurisdiction. The following civil penalty amounts apply to violations 
occurring after November 20, 2000:
    (a) Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1)--
$11,000;
    (b) Section 11(1) of the Clayton Act, 15 U.S.C. 21(1)--$5,500;
    (c) Section 5(1) of the FTC Act, 15 U.S.C. 45(1)--$11,000;
    (d) Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A)--
$11,000;
    (e) Section 5(m)(1)(B) of the FTC Act, 15 U.S.C. 45(m)(1)(B)--
$11,000;
    (f) Section 10 of the FTC Act, 15 U.S.C. 50--$110;
    (g) Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. 
65--$110;
    (h) Section 6(b) of the Wool Products Labeling Act, 15 U.S.C. 
68d(b)--$110;
    (i) Section 3(e) of the Fur Products Labeling Act, 15 U.S.C. 
69a(e)--$110;
    (j) Section 8(d)(2) of the Fur Products Labeling Act, 15 U.S.C. 
69f(d)(2)--$110;
    (k) Section 333(a) of the Energy Policy and Conservation Act, 42 
U.S.C. 6303(a)--$110;
    (l) Sections 525(a) and (b) of the Energy Policy and Conservation 
Act, 42 U.S.C. 6395(a) and (b)--$5,500 and $11,000, respectively; and
    (m) Civil monetary penalties authorized by reference to the Federal 
Trade Commission Act under any other provision of law within the 
jurisdiction of the Commission--refer to the amounts set forth in 
paragraphs (c), (d), (e) and (f) of this section, as applicable.

[65 FR 69666, Nov. 20, 2000]

    Effective Date Note: At 69 FR 76612, Dec. 22, 2004, Sec. 1.98 was 
amended by revising the introductory text, paragraph (b) and paragraph 
(l) effective January 21, 2005. For the convenience of the user, the 
revised text is set forth as follows:

Sec. 1.98  Adjustment of civil monetary penalty amounts.

    This section makes inflation adjustments in the dollar amounts of 
civil monetary penalties within the Commission's jurisdiction.

                                * * * * *

[[Page 32]]

    (b) Section 11(l) of the Clayton Act, 15 U.S.C. 21(l)--$6,500;

                                * * * * *

    (l) Sections 525(a) and (b) of the Energy Policy and Conservation 
Act, 42 U.S.C. 6395(a) and (b), respectively--$6,500 and $11,000, 
respectively; and

                                * * * * *



 Subpart M_Submissions Under the Small Business Regulatory Enforcement 
                              Fairness Act

    Authority: 5 U.S.C. 801-804.



Sec. 1.99  Submission of rules, guides, interpretations, and policy 
statements to Congress and the Comptroller General.

    Whenever the Commission issues or substantively amends a rule or 
industry guide or formally adopts an interpretation or policy statement 
that constitutes a ``rule'' within the meaning of 5 U.S.C. 804(3), a 
copy of the final rule, guide, interpretation or statement, together 
with a concise description, the proposed effective date, and a statement 
of whether the rule, guide, interpretation or statement is a ``major 
rule'' within the meaning of 5 U.S.C. 804(2), will be transmitted to 
each House of Congress and to the Comptroller General. The material 
transmitted to the Comptroller General will also include any additional 
relevant information required by 5 U.S.C. 801(a)(1)(B). This provision 
generally applies to rules issued or substantively amended pursuant to 
Sec. 1.14(c), Sec. 1.15(a), Sec. 1.19, or Sec. 1.26(d); industry 
guides issued pursuant to Sec. 1.6; interpretations and policy 
statements formally adopted by the Commission; and any rule of agency 
organization, practice or procedure that substantially affects the 
rights or obligations of non-agency parties.

[63 FR 36340, July 8, 1998]



PART 2_NONADJUDICATIVE PROCEDURES--Table of Contents




        Subpart A_Inquiries; Investigations; Compulsory Processes

Sec.
2.1 How initiated.
2.2 Request for Commission action.
2.3 Policy as to private controversies.
2.4 Investigational policy.
2.5 By whom conducted.
2.6 Notification of purpose.
2.7 Compulsory process in investigations.
2.8 Investigational hearings.
2.8A Withholding requested material.
2.9 Rights of witnesses in investigations.
2.10 Depositions.
2.11 Orders requiring access.
2.12 Reports.
2.13 Noncompliance with compulsory processes.
2.14 Disposition.
2.15 Orders requiring witnesses to testify or provide other information 
          and granting immunity.
2.16 Custodians.

   Subpart B_Petitions Filed Under Section 7A of the Clayton Act, as 
     Amended, for Review of Requests for Additional Information or 
                          Documentary Material

2.20 Petitions for review of requests for additional information or 
          documentary material.

                    Subpart C_Consent Order Procedure

2.31 Opportunity to submit a proposed consent order.
2.32 Agreement.
2.33 Compliance procedure.
2.34 Disposition.

                     Subpart D_Reports of Compliance

2.41 Reports of compliance.

                      Subpart E_Requests to Reopen

2.51 Requests to reopen.

    Authority: 15 U.S.C. 46, unless otherwise noted.



        Subpart A_Inquiries; Investigations; Compulsory Processes



Sec. 2.1  How initiated.

    Commission investigations and inquiries may be originated upon the 
request of the President, Congress, governmental agencies, or the 
Attorney General; upon referrals by the courts;

[[Page 33]]

upon complaint by members of the public; or by the Commission upon its 
own initiative. The Commission has delegated to the Director, Deputy 
Directors, and Assistant Directors of the Bureau of Competition, the 
Director, Deputy Directors, and Associate Directors of the Bureau of 
Consumer Protection and, the Regional Directors and Assistant Regional 
Directors of the Commission's regional offices, without power of 
redelegation, limited authority to initiate investigations. The Director 
of the Bureau of Competition has also been delegated, without power of 
redelegation, authority to open investigations in response to requests 
pursuant to an agreement under the International Antitrust Enforcement 
Assistance Act, 15 U.S.C. 6201 et seq., if the requests do not ask the 
Commission to use process. Before responding to such a request, the 
Bureau Director shall transmit the proposed response to the Secretary 
and the Secretary shall notify the Commission of the proposed response. 
If no Commissioner objects within three days following the Commission's 
receipt of such notification, the Secretary shall inform the Bureau 
Director that he or she may proceed.

[48 FR 41374, Sept. 15, 1983, as amended at 50 FR 53304, Dec. 31, 1985; 
65 FR 67259, Nov. 9, 2000]



Sec. 2.2  Request for Commission action.

    (a) Any individual, partnership, corporation, association, or 
organization may request the Commission to institute an investigation in 
respect to any matter over which the Commission has jurisdiction.
    (b) Such request should be in the form of a signed statement setting 
forth the alleged violation of law with such supporting information as 
is available, and the name and address of the person or persons 
complained of. No forms or formal procedures are required.
    (c) The person making the request is not regarded as a party to any 
proceeding which might result from the investigation.
    (d) It is the general Commission policy not to publish or divulge 
the name of an applicant or complaining party except as required by law 
or by the Commission's rules. Where a complaint is by a consumer or 
consumer representative concerning a specific consumer product or 
service, the Commission, in the course of a referral of the complaint or 
of an investigation, may disclose the identity of the complainant or 
complainants. In referring any such consumer complaint, the Commission 
specifically retains its right to take such action as it deems 
appropriate in the public interest and under any of the statutes which 
it administers.

[32 FR 8446, June 13, 1967, as amended at 35 FR 10146, June 20, 1970]



Sec. 2.3  Policy as to private controversies.

    The Commission acts only in the public interest and does not 
initiate an investigation or take other action when the alleged 
violation of law is merely a matter of private controversy and does not 
tend adversely to affect the public.

[32 FR 8446, June 13, 1967]



Sec. 2.4  Investigational policy.

    The Commission encourages voluntary cooperation in its 
investigations. Where the public interest requires, however, the 
Commission may, in any matter under investigation adopt a resolution 
authorizing the use of any or all of the compulsory processes provided 
for by law.

[45 FR 36341, May 29, 1980]



Sec. 2.5  By whom conducted.

    Inquiries and investigations are conducted under the various 
statutes administered by the Commission by Commission representatives 
designated and duly authorized for the purpose. Such representatives are 
``examiners'' or ``Commission investigators'' within the meaning of the 
Federal Trade Commission Act and are authorized to exercise and perform 
the duties of their office in accordance with the laws of the United 
States and the regulations of the Commission. Included among such duties 
is the administration of oaths and affirmations in any matter under 
investigation by the Commission.

[45 FR 36341, May 29, 1980]

[[Page 34]]



Sec. 2.6  Notification of purpose.

    Any person under investigation compelled or requested to furnish 
information or documentary evidence shall be advised of the purpose and 
scope of the investigation and of the nature of the conduct constituting 
the alleged violation which is under investigation and the provisions of 
law applicable to such violation.

[46 FR 26290, May 12, 1981; 46 FR 27634, May 21, 1981]



Sec. 2.7  Compulsory process in investigations.

    (a) In general. The Commission or any member thereof may, pursuant 
to a Commission resolution, issue a subpoena or a civil investigative 
demand directing the person named therein to appear before a designated 
representative at a designated time and place to testify or to produce 
documentary evidence, or both, or, in the case of a civil investigative 
demand, to provide a written report or answers to questions relating to 
any matter under investigation by the Commission. Material for which a 
civil investigative demand has been issued shall be made available for 
inspection and copying at the principal place of business of the person 
or at such other place or in such other manner as the person and the 
custodian designated pursuant to Sec. 2.16 agree.
    (b) Civil investigative demands. Civil investigative demands shall 
be the only form of compulsory process issued in investigations with 
respect to unfair or deceptive acts or practices within the meaning of 
FTC Act section 5(a)(1).
    (1) Civil investigative demands for the production of documentary 
material shall describe each class of material to be produced with such 
definiteness and certainty as to permit such material to be fairly 
identified, prescribe a return date or dates which will provide a 
reasonable period of time within which the material so demanded may be 
assembled and made available for inspection and copying or reproduction, 
and identify the custodian to whom such material shall be made 
available. Production of documentary material in response to a civil 
investigative demand shall be made in accordance with the procedures 
prescribed by section 20(c)(11) of the Federal Trade Commission Act.
    (2) Civil investigative demands for tangible things will describe 
each class of tangible things to be produced with such definiteness and 
certainty as to permit such things to be fairly identified, prescribe a 
return date or dates which will provide a reasonable period of time 
within which the things so demanded may be assembled and submitted, and 
identify the custodian to whom such things shall be submitted. 
Submission of tangible things in response to a civil investigative 
demand shall be made in accordance with the procedures prescribed by 
section 20(c)(12) of the Federal Trade Commission Act.
    (3) Civil investigative demands for written reports or answers to 
questions shall propound with definiteness and certainty the reports to 
be produced or the questions to be answered, prescribe a date or dates 
at which time written reports or answers to questions shall be 
submitted, and identify the custodian to whom such reports or answers 
shall be submitted. Response to a civil investigative demand for a 
written report or answers to questions shall be made in accordance with 
the procedures prescribed by section 20(c)(13) of the Federal Trade 
Commission Act.
    (4) Civil investigative demands for the giving of oral testimony 
shall prescribe a date, time, and place at which oral testimony shall be 
commenced, and identify a Commission investigator who shall conduct the 
investigation and the custodian to whom the transcript of such 
investigation shall be submitted. Oral testimony in response to a civil 
investigative demand shall be taken in accordance with the procedures 
prescribed by section 20(c)(14) of the Federal Trade Commission Act.
    (c) The Bureau Director, Deputy Directors and Assistant Directors of 
the Bureaus of Competition and Economics, the Director, Deputy Directors 
and Associate Directors of the Bureau of Consumer Protection, Regional 
Directors, and Assistant Regional Directors, are authorized to negotiate 
and approve the terms of satisfactory compliance with subpoenas and 
civil investigative demands and, for good cause shown, may extend the 
time prescribed

[[Page 35]]

for compliance. Specifically, the subpoena power conferred by Section 
329 of the Energy Policy and Conservation Act (42 U.S.C. 6299) is 
included within this delegation.
    (d) Petitions to limit or quash--(1) General. Any petition to limit 
or quash any investigational subpoena or civil investigative demand 
shall be filed with the Secretary of the Commission within twenty (20) 
days after service of the subpoena or civil investigative demand, or, if 
the return date is less than twenty (20) days after service, prior to 
the return date. Such petition shall set forth all assertions of 
privilege or other factual and legal objections to the subpoena or civil 
investigative demand, including all appropriate arguments, affidavits 
and other supporting documentation.
    (2) Statement. Each petition shall be accompanied by a signed 
statement representing that counsel for the petitioner has conferred 
with counsel for the Commission in an effort in good faith to resolve by 
agreement the issues raised by the petition and has been unable to reach 
such an agreement. If some of the matters in controversy have been 
resolved by agreement, the statement shall specify the matters so 
resolved and the matters remaining unresolved. The statement shall 
recite the date, time, and place of each such conference between 
counsel, and the names of all parties participating in each such 
conference.
    (3) Extensions of time. Bureau Directors, Deputy Directors, and 
Assistant Directors in the Bureaus of Competition and Economics, the 
Bureau Director, Deputy Directors and Associate Directors in the Bureau 
of Consumer Protection, Regional Directors and Assistant Regional 
Directors are delegated, without power of redelegation, the authority to 
rule upon requests for extensions of time within which to file such 
petitions.
    (4) Disposition. A Commissioner, to be designated by the Chairman, 
is delegated, without power of redelegation, the authority to rule upon 
petitions to limit or quash an investigational subpoena or civil 
investigative demand, but the designated Commissioner may, in his or her 
sole discretion, refer a petition to the full Commission for 
determination.
    (e) Stay of compliance period. The timely filing of a petition to 
limit or quash any investigational subpoena or civil investigative 
demand shall stay the time permitted for compliance with the portion 
challenged. If the petition is denied in whole or in part, the ruling 
will specify a new return date.
    (f) Review. Any petitioner, within three days after service of a 
ruling by the designated Commissioner denying all or a portion of the 
relief requested in its petition, may file with the Secretary of the 
Commission a request that the full Commission review the ruling. The 
timely filing of such a request shall not stay the return date specified 
in the ruling, unless otherwise specified by the Commission.
    (g) Public disclosure. All petitions to limit or quash 
investigational subpoenas or civil investigative demands and the 
responses thereto are part of the public records of the Commission, 
except for information exempt from disclosure under Sec. 4.10(a) of 
this chapter.

[45 FR 36342, May 29, 1980, as amended at 46 FR 26290, May 12, 1981; 48 
FR 41375, Sept. 15, 1983; 49 FR 6089, Feb. 17, 1984; 50 FR 42672, Oct. 
22, 1985; 60 FR 37747, July 21, 1995]



Sec. 2.8  Investigational hearings.

    (a) Investigational hearings, as distinguished from hearings in 
adjudicative proceedings, may be conducted in the course of any 
investigation undertaken by the Commission, including rulemaking 
proceedings under subpart B of part 1 of this chapter, inquiries 
initiated for the purpose of determining whether or not a respondent is 
complying with an order of the Commission or the manner in which decrees 
in suits brought by the United States under the antitrust laws are being 
carried out, the development of facts in cases referred by the courts to 
the Commission as a master in chancery, and investigations made under 
section 5 of the Export Trade Act.
    (b) Investigational hearings shall be conducted by any Commission 
member, examiner, attorney, investigator, or other person duly 
designated under the FTC Act, for the purpose of hearing the testimony 
of witnesses and receiving

[[Page 36]]

documents and other data relating to any subject under investigation. 
Such hearings shall be stenographically reported and a transcript 
thereof shall be made a part of the record of the investigation.
    (c) Unless otherwise ordered by the Commission, investigational 
hearings shall not be public. In investigational hearings conducted 
pursuant to a civil investigative demand for the giving of oral 
testimony, the Commission investigators shall exclude from the hearing 
room all other persons except the person being examined, his counsel, 
the officer before whom the testimony is to be taken, and the 
stenographer recording such testimony. A copy of the transcript shall 
promptly be forwarded by the Commission investigator to the custodian 
designated in Sec. 2.16.

[32 FR 8446, June 13, 1967, as amended at 45 FR 36342, May 29, 1980; 61 
FR 50645, Sept. 26, 1996]



Sec. 2.8A  Withholding requested material.

    (a) Any person withholding material responsive to an investigational 
subpoena or civil investigative demand issued pursuant to Sec. 2.7, an 
access order issued pursuant to Sec. 2.11, an order to file a report 
issued pursuant to Sec. 2.12, or any other request for production of 
material issued under this part, shall assert a claim of privilege or 
any similar claim not later than the date set for the production of 
material. Such person shall, if so directed in the subpoena, civil 
investigative demand or other request for production, submit, together 
with such claim, a schedule of the items withheld which states 
individually as to each such item the type, specific subject matter, and 
date of the item; the names, addresses, positions, and organizations of 
all authors and recipients of the item; and the specific grounds for 
claiming that the item is privileged.
    (b) A person withholding material solely for reasons described in 
Sec. 2.8A(a) shall comply with the requirements of that subsection in 
lieu of filing a motion to limit or quash compulsory process.

(Sec. 5, 38 Stat. 719 as amended (15 U.S.C. 45))

[44 FR 54042, Sept. 18, 1979, as amended at 45 FR 36342, May 29, 1980]



Sec. 2.9  Rights of witnesses in investigations.

    (a) Any person compelled to submit data to the Commission or to 
testify in an investigational hearing shall be entitled to retain a copy 
or, on payment of lawfully prescribed costs, procure a copy of any 
document submitted by him and of his own testimony as stenographically 
reported, except that in a nonpublic hearing the witness may for good 
cause be limited to inspection of the official transcript of his 
testimony. Where the investigational hearing has been conducted pursuant 
to a civil investigative demand issued under section 20 of the Federal 
Trade Commission Act, upon completion of transcription of the testimony 
of the witness, the witness shall be offered an opportunity to read the 
transcript of his testimony. Any changes in form or substance which the 
witness desires to make shall be entered and identified upon the 
transcript by the Commission investigator with a statement of the 
reasons given by the witness for making such changes. The transcript 
shall then be signed by the witness unless the witnesss cannot be found, 
is ill, waives in writing his right to signature or refuses to sign. If 
the transcript is not signed by the witness within thirty days of his 
being afforded a reasonable opportunity to review it, the Commission 
investigator shall take the actions prescribed by section 
20(c)(12)(E)(ii) of the Federal Trade Commission Act.
    (b) Any witness compelled to appear in person in an investigational 
hearing may be accompanied, represented, and advised by counsel as 
follows:
    (1) Counsel for a witness may advise the witness, in confidence and 
upon the initiative of either counsel or the witness, with respect to 
any question asked of the witness. If the witness refuses to answer a 
question, then counsel may briefly state on the record if he has advised 
the witness not to answer the question and the legal grounds for such 
refusal.
    (2) Where it is claimed that the testimony or other evidence sought 
from a witness is outside the scope of the investigation, or that the 
witness is privileged to refuse to answer a question or to produce other 
evidence, the witness or counsel for the witness may object

[[Page 37]]

on the record to the question or requirement and may state briefly and 
precisely the ground therefor. The witness and his counsel shall not 
otherwise object to or refuse to answer any question, and they shall not 
otherwise interrupt the oral examination.
    (3) Any objections made under the rules in this part will be treated 
as continuing objections and preserved throughout the further course of 
the hearing without the necessity for repeating them as to any similar 
line of inquiry. Cumulative objections are unnecessary. Repetition of 
the grounds for any objection will not be allowed.
    (4) Counsel for a witness may not, for any purpose or to any extent 
not allowed by paragraphs (b) (1) and (2) of this section, interrupt the 
examination of the witness by making any objections or statements on the 
record. Petitions challenging the Commission's authority to conduct the 
investigation or the sufficiency or legality of the subpoena or civil 
investigative demand must have been addressed to the Commission in 
advance of the hearing. Copies of such petitions may be filed as part of 
the record of the investigation with the person conducting the 
investigational hearing, but no arguments in support thereof will be 
allowed at the hearing.
    (5) Following completion of the examination of a witness, counsel 
for the witness may on the record request the person conducting the 
investigational hearing to permit the witness of clarify any of his or 
her answers. The grant or denial of such request shall be within the 
sole discretion of the person conducting the hearing.
    (6) The person conducting the hearing shall take all necessary 
action to regulate the course of the hearing to avoid delay and to 
prevent or restrain disorderly, dilatory, obstructionist, or 
contumacious conduct, or contemptuous language. Such person shall, for 
reasons stated on the record, immediately report to the Commission any 
instances where an attorney has allegedly refused to comply with his or 
her directions, or has allegedly engaged in disorderly, dilatory, 
obstructionist, or contumacious conduct, or contemptuous language in the 
course of the hearing. The Commission, acting pursuant to Sec. 4.1(e) 
of this chapter, will thereupon take such further action, if any, as the 
circumstances warrant, including suspension or disbarment of the 
attorney from further practice before the Commission or exclusion from 
further participation in the particular investigation.

(18 U.S.C. 6002, 6004)

[32 FR 8446, June 13, 1967, as amended at 45 FR 36343, May 29, 1980; 45 
FR 39244, June 10, 1980; 46 FR 26290, May 12, 1981; 50 FR 53304, Dec. 
31, 1985; 61 FR 50645, Sept. 26, 1996]



Sec. 2.10  Depositions.

    In investigations other than those conducted under section 20 of the 
Federal Trade Commission Act, the Commission may order testimony to be 
taken by deposition at any stage of such investigation. Such depositions 
may be taken before any person having power to administer oaths who may 
be designated by the Commission. The testimony shall be reduced to 
writing by the person taking the deposition, or under his direction, and 
shall then be subscribed to by the deponent. Any person may be compelled 
to appear and be deposed and to produce documentary evidence in the same 
manner as witnesses may be compelled to appear and testify and produce 
documentary evidence as provided in Sec. Sec. 2.7 through 2.9.

[45 FR 36343, May 29, 1980, as amended at 50 FR 53304, Dec. 31, 1985]



Sec. 2.11  Orders requiring access.

    (a) In investigations other than those conducted under section 20 of 
the Federal Trade Commission Act, the Commission may issue an order 
requiring any person, partnership or corporation being investigated to 
grant access to files for the purpose of examination and the right to 
copy any documentary evidence. The Directors, Deputy Directors and 
Assistant Directors of the Bureaus of Competition and Economics, the 
Director, Deputy Directors and Associate Directors of the Bureau of 
Consumer Protection, the Regional Directors, and Assistant Regional 
Directors of the Commission's regional offices, pursuant to delegation 
of authority by the Commission, without power of redelegation, are 
authorized, for good

[[Page 38]]

cause shown, to extend the time prescribed for compliance with orders 
requiring access issued during the investigation of any matter.
    (b) Any petition to limit or quash an order requiring access shall 
be filed with the Secretary of the Commission within twenty (20) days 
after service of the order, or, if the date for compliance is less than 
twenty (20) days after service of the order, then before the return 
date. Such petition shall set forth all assertions of privilege or other 
factual and legal objections to the order requiring access, including 
all appropriate arguments, affidavits and other supporting 
documentation. All petitions to limit or quash orders requiring access 
shall be ruled upon by the Commission itself, but the above-designated 
Directors, Deputy Directors, Assistant Directors, Associate Directors, 
Regional Directors and Assistant Regional Directors are delegated, 
without power of redelegation, the authority to rule upon motions for 
extensions of time within which to file petitions to limit or quash 
orders requiring access.
    (c) The timely filing of any petition to limit or quash such an 
order shall stay the requirement of compliance if the Commission has not 
ruled upon the motion by the date of compliance. If it rules on or 
subsequent to the date required for compliance and its ruling denies the 
petition in whole or in part, the Commission shall specify a new date of 
compliance.
    (d) All petitions to limit or quash orders requiring access, and the 
Commission's responses thereto, are part of the public records of the 
Commission, except for information exempt from disclosure under Sec. 
4.10(a) of this chapter.

[46 FR 26290, May 12, 1981, as amended at 48 FR 41375, Sept. 15, 1983]



Sec. 2.12  Reports.

    (a) In investigations other than those covered by section 20 of the 
Federal Trade Commission Act the Commission may issue an order requiring 
a person, partnership, or corporation to file a report or answers in 
writing to specific questions relating to any matter under 
investigation, study or survey, or under any of the Commission's 
reporting programs.
    (b) The Directors, Deputy Directors and Assistant Directors of the 
Bureaus of Competition and Economics, the Director, Deputy Directors and 
Associate Directors of the Bureau of Consumer Protection, and the 
Regional Directors and Assistant Regional Directors of the Commission's 
regional offices, pursuant to delegation of authority by the Commission, 
without power of redelegation, are authorized, for good cause shown, to 
extend the time prescribed for compliance with orders requiring reports 
or answers to questions issued during the investigation, study or survey 
of any matter or in connection with any of the Commission's reporting 
programs.
    (c) Any petition to limit or quash an order requiring a report or 
answer to specific questions shall be filed with the Secretary of the 
Commission within twenty (20) days after service of the order, or, if 
the date for compliance is less than twenty (20) days after service of 
the order, then before the return date. Such petition shall set forth 
all assertions of privilege or other factual and legal objections to the 
order requiring a report or answer to specific questions, including all 
appropriate arguments, affidavits and other supporting documentation. 
All petitions to limit or quash orders requiring reports or answers to 
questions shall be ruled upon by the Commission itself, but the above-
designated Directors, Deputy Directors, Assistant Directors, Associate 
Directors, Regional Directors and Assistant Regional Directors are 
delegated, without power of redelegation, the authority to rule upon 
motions for extensions of time within which to file petitions to limit 
or quash orders requiring reports or answers to questions.
    (d) Except as otherwise provided by the Commission, the timely 
filing of any petition to limit or quash such an order shall stay the 
requirement of return on the portion challenged if the Commission has 
not ruled upon the petition by the return date. If it rules on or 
subsequent to the return date and its ruling denies the petition in 
whole or in part, the Commission shall specify a new return date.
    (e) All petitions to limit or quash orders requiring a report or 
answers to

[[Page 39]]

specific questions, and the Commission's responses thereto, are part of 
the public records of the Commission, except for information exempt from 
disclosure under Sec. 4.10(a) of this chapter.

[41 FR 54485, Dec. 14, 1976, as amended at 45 FR 36343, May 29, 1980; 46 
FR 26290, May 12, 1981; 48 FR 41375, Sept. 15, 1983; 50 FR 53304, Dec. 
31, 1985]



Sec. 2.13  Noncompliance with compulsory processes.

    (a) In cases of failure to comply with Commission compulsory 
processes, appropriate action may be initiated by the Commission or the 
Attorney General, including actions for enforcement, forfeiture, or 
penalties or criminal actions.
    (b) The General Counsel, pursuant to delegation of authority by the 
Commission, without power of redelegation, is authorized:
    (1) To institute, on behalf of the Commission, an enforcement 
proceeding in connection with the failure or refusal of a person, 
partnership, or corporation to comply with, or to obey, a subpoena, or 
civil investigative demand if the return date or any extension thereof 
has passed;
    (2) To approve and have prepared and issued, in the name of the 
Commission when deemed appropriate by the General Counsel, a notice of 
default in connection with the failure of a person, partnership, or 
corporation to timely file a report pursuant to section 6(b) of the 
Federal Trade Commission Act, if the return date or any extension 
thereof has passed;
    (3) To institute, on behalf of the Commission, an enforcement 
proceeding and to request, on behalf of the Commission, the institution, 
when deemed appropriate by the General Counsel, of a civil action in 
connection with the failure of a person, partnership, or corporation to 
timely file a report pursuant to an order under section 6(b) of the 
Federal Trade Commission Act, if the return date or any extension 
thereof has passed; and
    (4) To seek civil contempt in cases where a court order enforcing 
compulsory process has been violated.

[41 FR 54485, Dec. 14, 1976, as amended at 45 FR 39244, June 10, 1980; 
50 FR 53304, Dec. 31, 1985]



Sec. 2.14  Disposition.

    (a) When the facts disclosed by an investigation indicate that 
corrective action is warranted, and the matter is not subject to a 
consent settlement pursuant to subpart C of this part, further 
proceedings may be instituted pursuant to the provisions of part 3 of 
this chapter.
    (b) When the facts disclosed by an investigation indicate that 
corrective action is not necessary or warranted in the public interest, 
the investigational file will be closed. The matter may be further 
investigated at any time if circumstances so warrant.
    (c) The Commission has delegated to the Director, Deputy Directors, 
and Assistant Directors of the Bureau of Competition, the Director, 
Deputy Directors and Associate Directors of the Bureau of Consumer 
Protection, and Regional Directors, without power of redelegation, 
limited authority to close investigations.

[32 FR 8446, June 13, 1967, as amended at 42 FR 42195, Aug. 22, 1977; 48 
FR 41375, Sept. 15, 1983; 50 FR 53304, Dec. 31, 1985]



Sec. 2.15  Orders requiring witnesses to testify or provide other 
information and granting immunity.

    (a) The Bureau Director, Deputy Directors, and Assistant Directors 
in the Bureaus of Competition and Economics, the Bureau Director, Deputy 
Directors and Associate Directors of the Bureau of Consumer Protection, 
Regional Directors and Assistant Regional Directors are hereby 
authorized to request, through the Commission's liaison officer, 
approval from the Attorney General for the issuance of an order 
requiring a witness to testify or provide other information granting 
immunity under title 18, section 6002, of the United States Code.
    (b) The Commission retains the right to review the exercise of any 
of the functions delegated under paragraph (a) of this section. Appeals 
to the Commission from an order requiring a witness to testify or 
provide other information will be entertained by the Commission only 
upon a showing that a substantial question is involved, the 
determination of which is essential to serve the interests of justice. 
Such appeals shall be made on the record and

[[Page 40]]

shall be in the form of a brief not to exceed fifteen (15) pages in 
length and shall be filed within five (5) days after notice of the 
complained of action. The appeal shall not operate to suspend the 
hearing unless otherwise determined by the person conducting the hearing 
or ordered by the Commission.

(18 U.S.C. 6002, 6004)

[37 FR 5016, Mar. 9, 1972, as amended at 48 FR 41375, Sept. 15, 1983; 61 
FR 50645, Sept. 26, 1996]



Sec. 2.16  Custodians.

    (a) Designation. The Commission shall designate a custodian and one 
or more deputy custodians for material to be delivered pursuant to 
compulsory process in a investigation, a purpose of which is to 
determine whether any person may have violated any provision of the laws 
administered by the Commission. The custodian shall have the powers and 
duties prescribed by section 21 of the FTC Act. Deputy custodians may 
perform all of the duties assigned to custodians. The appropriate Bureau 
Directors, Deputy Directors, Associate Directors in the Bureau of 
Consumer Protection, Assistant Directors in the Bureau of Competition, 
Regional Directors or Assistant Regional Directors shall take the action 
required by section 21(b)(7) of the FTC Act if it is necessary to 
replace a custodian or deputy custodian.
    (b) Copying of custodial documents. The custodian designated 
pursuant to section 21 of the Federal Trade Commission Act (subject to 
the general supervision of the Executive Director) may, from among the 
material submitted, select the material the copying of which is 
necessary or appropriate for the official use of the Commission, and 
shall determine, the number of copies of any such material that are to 
be reproduced. Copies of material in the physical possession of the 
custodian may be reproduced by or under the authority of an employee of 
the Commission designated by the custodian.
    (c) Material produced pursuant to the Federal Trade Commission Act, 
while in the custody of the custodian, shall be for the official use of 
the Commission in accordance with the Act; but such material shall upon 
reasonable notice to the custodian be made available for examination by 
the person who produced such material, or his duly authorized 
representative, during regular office hours established for the 
Commission.

[45 FR 36343, May 29, 1980, as amended at 46 FR 26291, May 12, 1981; 48 
FR 41376, Sept. 15, 1983; 50 FR 53305, Dec. 31, 1985]



   Subpart B_Petitions Filed Under Section 7A of the Clayton Act, as 
 
 Amended, for Review of Requests for Additional Information or 
                          Documentary Material

    Authority: 15 U.S.C. 18a(d), (e).



Sec. 2.20  Petitions for review of requests for additional information 
or documentary material.

    (a) For purposes of this section, ``second request'' refers to a 
request for additional information or documentary material issued under 
16 CFR 803.20.
    (b) Second request procedures--(1) Notice. Every request for 
additional information or documentary material issued under 16 CFR 
803.20 shall inform the recipient(s) of the request that the recipient 
has a right to discuss modifications or clarifications of the request 
with an authorized representative of the Commission. The request shall 
identify the name and telephone number of at least one such 
representative.
    (2) Second request conference. An authorized representative of the 
Commission shall invite the recipient to discuss the request for 
additional information or documentary material soon after the request is 
issued. At the conference, the authorized representative shall discuss 
the competitive issues raised by the proposed transaction, to the extent 
then known, and confer with the recipient about the most effective way 
to obtain information and documents relating to the competitive issues 
raised. The conference will ordinarily take place within 5 business days 
of issuance of the request, unless the recipient declines the invitation 
or requests a later date.
    (3) Modification of requests. The authorized representative shall 
modify the request for additional information

[[Page 41]]

or documentary material, or recommend such modification to the 
responsible Assistant Director of the Bureau of Competition, if he or 
she determines that a less burdensome request would be consistent with 
the needs of the investigation. A request for additional information or 
documentary material may be modified only in writing signed by the 
authorized representative.
    (4) Review of request decisions. (i) If the recipient of a request 
for additional information or documentary material believes that 
compliance with portions of the request should not be required and the 
recipient has exhausted reasonable efforts to obtain clarifications or 
modifications of the request from an authorized representative, the 
recipient may petition the General Counsel to consider and rule on 
unresolved issues. Such petition shall be submitted by letter to the 
General Counsel with a copy to the authorized representative who 
participated in the second request conference held under paragraph 
(b)(3) of this section. The petition shall not, without leave of the 
General Counsel, exceed 500 words, excluding any cover, table of 
contents, table of authorities, glossaries, proposed form of relief and 
any appendices containing only sections of statutes or regulations, and 
shall address petitioner's efforts to obtain modification from the 
authorized representative.
    (ii) Within 2 business days after receiving such a petition, the 
General Counsel shall set a date for a conference with the petitioner 
and the authorized representative.
    (iii) Such conference shall take place within 7 business days after 
the General Counsel receives the petition, unless the request recipient 
agrees to a later date or declines to attend a conference.
    (iv) Not later than 3 business days before the date of the 
conference, the petitioner and the authorized representative may each 
submit memoranda regarding the issues presented in the petition. Such 
memoranda shall not, without leave of the General Counsel, exceed 1250 
words, excluding any cover, table of contents, table of authorities, 
glossaries, proposed form of relief and appendices containing only 
sections of statutes or regulations. Such memoranda shall be delivered 
to counsel for the other participants on the same day they are delivered 
to the General Counsel.
    (v) The petitioner's memorandum shall include a concise statement of 
reasons why the request should be modified, together with proposed 
modifications, or a concise explanation why the recipient believes it 
has substantially complied with the request for additional information 
or documentary material.
    (vi) The authorized representative's memorandum shall include a 
concise statement of reasons why the petitioner's proposed modifications 
are inappropriate or a concise statement of the reasons why the 
representative believes that the petitioner has not substantially 
complied with the request for additional information and documentary 
material.
    (vii) The General Counsel shall advise the petitioner and the 
authorized representative of his or her decision within 3 business days 
following the conference.

[66 FR 8721, Feb. 1, 2001]



                    Subpart C_Consent Order Procedure



Sec. 2.31  Opportunity to submit a proposed consent order.

    (a) Where time, the nature of the proceeding, and the public 
interest permit, any individual, partnership, or corporation being 
investigated shall be afforded the opportunity to submit through the 
operating Bureau or Regional Office having responsibility in the matter 
a proposal for disposition of the matter in the form of a consent order 
agreement executed by the party being investigated and complying with 
the requirements of Sec. 2.32, for consideration by the Commission in 
connection with a proposed complaint submitted by the Commission's 
staff.
    (b) After a complaint has been issued, the consent order procedure 
described in this part will not be available except as provided in Sec. 
3.25(b).

[40 FR 15235, Apr. 4, 1975]

[[Page 42]]



Sec. 2.32  Agreement.

    Every agreement in settlement of a Commission complaint shall 
contain, in addition to an appropriate proposed order, either an 
admission of the proposed findings of fact and conclusions of law 
submitted simultaneously by the Commission's staff or an admission of 
all jurisdictional facts and an express waiver of the requirement that 
the Commission's decision contain a statement of findings of fact and 
conclusions of law. Every agreement also shall waive further procedural 
steps and all rights to seek judicial review or otherwise to challenge 
or contest the validity of the order. In addition, where appropriate, 
every agreement in settlement of a Commission complaint challenging the 
lawfulness of a proposed merger or acquisition shall also contain a 
hold-separate or asset-maintenance order. The agreement may state that 
the signing thereof is for settlement purposes only and does not 
constitute an admission by any party that the law has been violated as 
alleged in the complaint. Every agreement shall provide that:
    (a) The complaint may be used in construing the terms of the order;
    (b) No agreement, understanding, representation, or interpretation 
not contained in the order or the aforementioned agreement may be used 
to vary or to contradict the terms of the order;
    (c) The order will have the same force and effect and may be 
altered, modified or set aside in the same manner provided by statute 
for Commission orders issued on a litigated or stipulated record;
    (d) Except as provided by order of the Commission, any order issued 
pursuant to the agreement will become final upon service;
    (e) The agreement will not become a part of the public record unless 
and until it is accepted by the Commission; and
    (f) If the Commission accepts the agreement, further proceedings 
will be governed by Sec. 2.34.

[64 FR 46268, Aug. 25, 1999]



Sec. 2.33  Compliance procedure.

    The Commission may in its discretion require that a proposed 
agreement containing an order to cease and desist be accompanied by an 
initial report signed by the respondent setting forth in precise detail 
the manner in which the respondent will comply with the order when and 
if entered. Such report will not become part of the public record unless 
and until the accompanying agreement and order are accepted by the 
Commission. At the time any such report is submitted a respondent may 
request confidentiality for any portion thereof with a precise showing 
of justification therefor as set out in Sec. 4.9(c) and the General 
Counsel or the General Counsel's designee will dispose of such requests 
in accordance with that section.

[63 FR 32977, June 17, 1998]



Sec. 2.34  Disposition.

    (a) Acceptance of proposed consent agreement. The Commission may 
accept or refuse to accept a proposed consent agreement. Except as 
otherwise provided in paragraph (c) of this section, acceptance does not 
constitute final approval, but it serves as the basis for further 
actions leading to final disposition of the matter.
    (b) Effectiveness of hold-separate or asset-maintenance order. 
Following acceptance of a consent agreement, the Commission will, if it 
deems a hold-separate or asset-maintenance order appropriate, issue a 
complaint and such an order as agreed to by the parties. Such order will 
be final upon service. The issuance of a complaint under this paragraph 
will neither commence an adjudicatory proceeding subject to part 3 of 
this chapter nor subject the consent agreement proceeding to the 
prohibitions specified in Sec. 4.7 of this chapter.
    (c) Public comment. Promptly after its acceptance of the consent 
agreement, the Commission will place the order contained in the consent 
agreement, the complaint, and the consent agreement on the public record 
for a period of 30 days, or such other period as the Commission may 
specify, for the receipt of comments or views from any interested 
person. At the same time, the Commission will place on the public record 
an explanation of the provisions of the order and the relief to be

[[Page 43]]

obtained thereby and any other information that it believes may help 
interested persons understand the order. The Commission also will 
publish the explanation in the Federal Register. The Commission retains 
the discretion to issue a complaint and a Final Decision and Order, 
incorporating the order contained in a consent agreement, in appropriate 
cases before seeking public comment. Unless directed otherwise by the 
Commission, such Decision and Order will be final upon service.
    (d) Comment on initial compliance report. If respondents have filed 
an initial report of compliance pursuant to Sec. 2.33, the Commission 
will place that report on the public record, except for portions, if 
any, granted confidential treatment pursuant to Sec. 4.9(c) of this 
chapter, with the complaint, the order, and the consent agreement.
    (e) Action following comment period. (1) Following the comment 
period, on the basis of comments received or otherwise, the Commission 
may either withdraw its acceptance of the agreement and so notify 
respondents, in which event it will take such other action as it may 
consider appropriate, or issue and serve its complaint in such form as 
the circumstances may require and its decision in disposition of the 
proceeding.
    (2) The Commission, following the comment period, may determine, on 
the basis of the comments or otherwise, that a Final Decision and Order 
that was issued in advance of the comment period should be modified. 
Absent agreement by respondents to the modifications, the Commission may 
initiate a proceeding to reopen and modify the decision and order in 
accordance with Sec. 3.72(b) of this chapter or commence a new 
administrative proceeding by issuing a complaint in accordance with 
Sec. 3.11 of this chapter.

[64 FR 46269, Aug. 25, 1999]



                     Subpart D_Reports of Compliance



Sec. 2.41  Reports of compliance.

    (a) In every proceeding in which the Commission has issued an order 
pursuant to the provisions of section 5 of the Federal Trade Commission 
Act or section 11 of the Clayton Act, as amended, and except as 
otherwise specifically provided in any such order, each respondent named 
in such order shall file with the Commission, within sixty (60) days 
after service thereof, or within such other time as may be provided by 
the order or the rules in this chapter, a report in writing, signed by 
the respondent, setting forth in detail the manner and form of his 
compliance with the order, and shall thereafter file with the Commission 
such further signed, written reports of compliance as it may require. An 
original and one copy of each such report shall be filed with the 
Secretary of the Commission, and one copy of each such report shall be 
filed with the Associate Director for Enforcement in the Bureau of 
Consumer Protection (for consumer protection orders) or with the 
Assistant Director for Compliance in the Bureau of Competition (for 
competition orders). Reports of compliance shall be under oath if so 
requested. Where the order prohibits the use of a false advertisement of 
a food, drug, device, or cosmetic which may be injurious to health 
because of results from its use under the conditions prescribed in the 
advertisement, or under such conditions as are customary or usual, or if 
the use of such advertisement is with intent to defraud or mislead, or 
in any other case where the circumstances so warrant, the order may 
provide for an interim report stating whether and how respondents intend 
to comply to be filed within ten (10) days after service of the order. 
Neither the filing of an application for stay pursuant to Sec. 3.56, 
nor the filing of a petition for judicial review, shall operate to 
postpone the time for filing a compliance report under the order or this 
section. If the Commission, or a court, determines to grant a stay of an 
order, or portion thereof, pending judicial review, or if any order 
provision is automatically stayed by statute, no compliance report shall 
be due as to those portions of the order that are stayed unless ordered 
by the court. Thereafter, as to orders, or portions thereof, that are 
stayed, the time for filing a report of compliance shall begin to run de 
novo from the final judicial determination, except that if no petition 
for certiorari

[[Page 44]]

has been filed following affirmance of the order of the Commission by a 
court of appeals, the compliance report shall be due the day following 
the date on which the time expires for the filing of such petition. 
Staff of the Bureaus of Competition and Consumer Protection will review 
such reports of compliance and may advise each respondent whether the 
staff intends to recommend that the Commission take any enforcement 
action. The Commission may, however, institute proceedings, including 
certification of facts to the Attorney General pursuant to the 
provisions of section 5(l) of the Federal Trade Commission Act (15 
U.S.C. 45(l)) and section 11(1) of the Clayton Act, as amended (15 
U.S.C. 21(1)), to enforce compliance with an order, without advising a 
respondent whether the actions set forth in a report of compliance 
evidence compliance with the Commission's order or without prior notice 
of any kind to a respondent.
    (b) The Commission has delegated to the Director, the Deputy 
Directors, and the Assistant Director for Compliance of the Bureau of 
Competition, and to the Director, the Deputy Directors, and the 
Associate Director for Enforcement of the Bureau of Consumer Protection 
the authority to monitor compliance reports and to open and close 
compliance investigations. With respect to any compliance matter which 
has received previous Commission consideration as to compliance or in 
which the Commission or any Commissioner has expressed an interest, any 
matter proposed to be closed by reason of expense of investigation or 
testing, or any matter involving substantial questions as to the public 
interest, Commission policy or statutory construction, the Bureaus shall 
submit an analysis to the Commission regarding their intended actions.
    (c) The Commission has delegated to the Director, Deputy Directors, 
and Assistant Directors of the Bureau of Competition and to the 
Director, Deputy Directors, and Associate Directors of the Bureau of 
Consumer Protection, and to the Regional Directors, the authority, for 
good cause shown, to extend the time within which reports of compliance 
with orders to cease and desist may be filed. It is to be noted, 
however, that an extension of time within which a report of compliance 
may be filed, or the filing of a report which does not evidence full 
compliance with the order, does not in any circumstances suspend or 
relieve a respondent from his obligation under the law with respect to 
compliance with such order. An order of the Commission to cease and 
desist becomes final on the date and under the conditions provided in 
the Federal Trade Commission Act and the Clayton Act. Any person, 
partnership or corporation against which an order to cease and desist 
has been issued who is not in full compliance with such order on and 
after the date provided in these statutes for the order to become final 
is in violation of such order and is subject to an immediate action for 
civil penalties. The authority under this paragraph may not be 
redelegated, except that the Associate Director for Enforcement in the 
Bureau of Consumer Protection and the Assistant Director for Compliance 
in the Bureau of Competition may each name a designee under this 
paragraph.
    (d) Any respondent subject to a Commission order may request advice 
from the Commission as to whether a proposed course of action, if 
pursued by it, will constitute compliance with such order. The request 
for advice should be submitted in writing to the Secretary of the 
Commission and should include full and complete information regarding 
the proposed course of action. On the basis of the facts submitted, as 
well as other information available to the Commission, the Commission 
will inform the respondent whether or not the proposed course of action, 
if pursued, would constitute compliance with its order. A request 
ordinarily will be considered inappropriate for such advice:
    (1) Where the course of action is already being followed by the 
requesting party;
    (2) Where the same or substantially the same course of action is 
under investigation or is or has been the subject of a current 
proceeding, order, or decree initiated or obtained by the Commission or 
another governmental agency; or
    (3) Where the proposed course of action or its effects may be such 
that an informed decision thereon cannot be

[[Page 45]]

made or could be made only after extensive investigation, clinical 
study, testing or collateral inquiry.

Furthermore, the filing of a request for advice under this paragraph 
does not in any circumstances suspend or relieve a respondent from his 
obligation under the law with respect to his compliance with the order. 
He must in any event be in full compliance on and after the date the 
order becomes final as prescribed by statute referred to in paragraph 
(b) of this section. Advice to respondents under this paragraph will be 
published by the Commission in the same manner and subject to the same 
restrictions and considerations as advisory opinions under Sec. 1.4 of 
this chapter.
    (e) The Commission may at any time reconsider any advice given under 
this section and, where the public interest requires, rescind or revoke 
its prior advice. In such event the respondent will be given notice of 
the Commission's intent to revoke or rescind and will be given an 
opportunity to submit its views to the Commission. The Commission will 
not proceed against a respondent for violation of an order with respect 
to any action which was taken in good faith reliance upon the 
Commission's advice under this section, where all relevant facts were 
fully, completely, and accurately presented to the Commission and where 
such action was promptly discontinued upon notification of rescission or 
revocation of the Commission's advice.
    (f)(1) All applications for approval of proposed divestitures, 
acquisitions, or similar transactions subject to Commission review under 
outstanding orders shall fully describe the terms of the transaction and 
shall set forth why the transaction merits Commission approval. Such 
applications will be placed on the public record, together with any 
additional applicant submissions that the Commission directs be placed 
on the public record. The Director of the Bureau of Competition is 
delegated the authority to direct such placement.
    (2) The Commission will receive public comment on a prior approval 
application for 30 days. During the comment period, any person may file 
formal written objections or comments with the Secretary of the 
Commission, and such objections or comments shall be placed on the 
public record. In appropriate cases, the Commission may shorten, 
eliminate, extend, or reopen a comment period.
    (3) Responses to applications under this section, together with a 
statement of supporting reasons, will be published when made, together 
with responses to any public comments filed under this section.
    (4) Persons submitting information that is subject to public record 
disclosure under this section may request confidential treatment for 
that information or portions thereof in accordance with Sec. 4.9(c) and 
the General Counsel or the General Counsel's designee will dispose of 
such requests in accordance with that section. Nothing in this section 
requires that confidentiality requests be resolved prior to, or 
contemporaneously with, the disposition of the application.

[32 FR 8449, June 13, 1967]

    Editorial Note: For Federal Register citations affecting Sec. 2.41, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



                      Subpart E_Requests to Reopen



Sec. 2.51  Requests to reopen.

    (a) Scope. Any person, partnership, or corporation subject to a 
Commission decision containing a rule or order which has become 
effective, or an order to cease and desist which has become final, may 
file with the Secretary a request that the Commission reopen the 
proceeding to consider whether the rule or order, including any 
affirmative relief provision contained therein, should be altered, 
modified, or set aside in whole or in part.
    (b) Contents. A request under this section shall contain a 
satisfactory showing that changed conditions of law or fact require the 
rule or order to be altered, modified or set aside, in whole or in part, 
or that the public interest so requires.
    (1) This requirement shall not be deemed satisfied if a request is 
merely conclusory or otherwise fails to set forth by affidavit(s) 
specific facts demonstrating in detail:

[[Page 46]]

    (i) The nature of the changed conditions and the reasons why they 
require the requested modifications of the rule or order; or
    (ii) The reasons why the public interest would be served by the 
modification.
    (2) Each affidavit shall set forth facts that would be admissible in 
evidence and shall show that the affiant is competent to testify to the 
matters stated therein. All information and material that the requester 
wishes the Commission to consider shall be contained in the request at 
the time of filing.
    (c) Opportunity for public comment. A request under this section 
shall be placed on the public record except for material exempt from 
public disclosure under rule 4.10(a). Unless the Commission determines 
that earlier disposition is necessary, the request shall remain on the 
public record for thirty (30) days after a press release on the request 
is issued. Bureau Directors are authorized to publish a notice in the 
Federal Register announcing the receipt of a request to reopen at their 
discretion. The public is invited to comment on the request while it is 
on the public record.
    (d) Determination. After the period for public comments on a request 
under this section has expired and no later than one hundred and twenty 
(120) days after the date of the filing of the request, the Commission 
shall determine whether the request complies with paragraph (b) of this 
section and whether the proceeding shall be reopened and the rule or 
order should be altered, modified, or set aside as requested. In doing 
so, the Commission may, in its discretion, issue an order reopening the 
proceeding and modifying the rule or order as requested, issue an order 
to show cause pursuant to Sec. 3.72, or take such other action as is 
appropriate: Provided, however, That any action under Sec. 3.72 or 
otherwise shall be concluded within the specified 120-day period.

(Sec. 6(g), 38 Stat. 721 (15 U.S.C. 46(g)); 80 Stat. 383, as amended, 81 
Stat. 54 (5 U.S.C. 552))

[45 FR 36344, May 29, 1980, as amended at 46 FR 26291, May 12, 1981; 47 
FR 33251, Aug. 2, 1982; 50 FR 53305, Dec. 31, 1985; 53 FR 40868, Oct. 
19, 1988; 65 FR 50637, Aug. 21, 2000]



PART 3_RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS--Table of Contents




      Subpart A_Scope of Rules; Nature of Adjudicative Proceedings

Sec.
3.1 Scope of the rules in this part.
3.2 Nature of adjudicative proceedings.

                           Subpart B_Pleadings

3.11 Commencement of proceedings.
3.11A Fast-track proceedings.
3.12 Answer.
3.13 Adjudicative hearing on issues arising in rulemaking proceedings 
          under the Fair Packaging and Labeling Act.
3.14 Intervention.
3.15 Amendments and supplemental pleadings.

Subpart C_Prehearing Procedures; Motions; Interlocutory Appeals; Summary 
                                Decisions

3.21 Prehearing procedures.
3.22 Motions.
3.23 Interlocutory appeals.
3.24 Summary decisions.
3.25 Consent agreement settlements.
3.26 Motions following denial of preliminary injunctive relief.

                 Subpart D_Discovery; Compulsory Process

3.31 General provisions.
3.32 Admissions.
3.33 Depositions.
3.34 Subpoenas.
3.35 Interrogatories to parties.
3.36 Applications for subpoenas for records, or appearances by officials 
          or employees, of governmental agencies other than the 
          Commission, and subpoenas to be served in a foreign country.
3.37 Production of documents and things; access for inspection and other 
          purposes.
3.38 Motion for order compelling disclosure or discovery; sanctions.
3.38A Withholding requested material.
3.39 Orders requiring witnesses to testify or provide other information 
          and granting immunity.
3.40 Admissibility of evidence in advertising substantiation cases.

                           Subpart E_Hearings

3.41 General rules.
3.42 Presiding officials.
3.43 Evidence.
3.44 Record.
3.45 In camera orders.
3.46 Proposed findings, conclusions, and order.

[[Page 47]]

                           Subpart F_Decision

3.51 Initial decision.
3.52 Appeal from initial decision.
3.53 Review of initial decision in absence of appeal.
3.54 Decision on appeal or review.
3.55 Reconsideration.
3.56 Effective date of orders; application for stay.

Subpart G [Reserved]

                   Subpart H_Reopening of Proceedings

3.71 Authority.
3.72 Reopening.

 Subpart I_Recovery of Awards Under the Equal Access to Justice Act in 
                         Commission Proceedings

3.81 General provisions.
3.82 Information required from applicants.
3.83 Procedures for considering applicants.

    Authority: 15 U.S.C. 46, unless otherwise noted.

    Source: 32 FR 8449, June 13, 1967, unless otherwise noted.



      Subpart A_Scope of Rules; Nature of Adjudicative Proceedings



Sec. 3.1  Scope of the rules in this part.

    The rules in this part govern procedure in adjudicative proceedings. 
It is the policy of the Commission that, to the extent practicable and 
consistent with requirements of law, such proceedings shall be conducted 
expeditiously. In the conduct of such proceedings the Administrative Law 
Judge and counsel for all parties shall make every effort at each state 
of a proceeding to avoid delay.



Sec. 3.2  Nature of adjudicative proceedings.

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

[45 FR 67319, Oct. 10, 1980]



                           Subpart B_Pleadings



Sec. 3.11  Commencement of proceedings.

    (a) Complaint. Except as provided in Sec. 3.13, an adjudicative 
proceeding is commenced when an affirmative vote is taken by the 
Commission to issue a complaint.
    (b) Form of complaint. The Commission's complaint shall contain the 
following:
    (1) Recital of the legal authority and jurisdiction for institution 
of the proceeding, with specific designation of the statutory provisions 
alleged to have been violated;
    (2) A clear and concise factual statement sufficient to inform each 
respondent with reasonable definiteness of the type of acts or practices 
alleged to be in violation of the law;
    (3) Where practical, a form of order which the Commission has reason 
to

[[Page 48]]

believe should issue if the facts are found to be as alleged in the 
complaint; and
    (4) Notice of the time and place for hearing, the time to be at 
least thirty (30) days after service of the complaint.
    (c) Motion for more definite statement. Where the respondent makes a 
reasonable showing that it cannot frame a responsive answer based on the 
allegations contained in the complaint, the respondent may move for a 
more definite statement of the charges against it before filing an 
answer. Such a motion shall be filed within ten (10) days after service 
of the complaint and shall point out the defects complained of and the 
details desired.

[32 FR 8449, June 13, 1967, as amended at 43 FR 11978, Mar. 23, 1978; 50 
FR 53305, Dec. 31, 1985]



Sec. 3.11A  Fast-track proceedings.

    (a) Scope and applicability. This section governs the availability 
of fast-track procedures in administrative cases where the Commission 
files a collateral federal district court complaint that seeks 
preliminary injunctive relief against some or all of the conduct alleged 
in the Commission's administrative complaint. The Commission will afford 
the respondent the opportunity to elect such fast-track procedures, 
subject to the conditions set forth in paragraph (b)(1) of this section, 
in cases that the Commission designates as appropriate. In cases so 
designated, the Commission will provide written notice to each 
respondent at the time that it is served with the Commission's federal 
district court complaint for preliminary injunctive relief. Except as 
modified by this section, the rules contained in subparts A through I of 
part 3 of this chapter will govern fast-track procedures in adjudicative 
proceedings. Discovery will be governed by subpart D of this part, and 
the Administrative Law Judge may exercise his plenary authority under 
Sec. 3.42(c)(6) to establish limitations on the number of depositions, 
witnesses, or any document production.
    (b)(1) Conditions. In cases designated as appropriate by the 
Commission pursuant to paragraph (a) of this section, a respondent may 
elect fast-track procedures:
    (i) if a federal court enters a preliminary injunction against some 
or all of the conduct alleged in the Commission's administrative 
complaint; or,
    (ii) where no such injunction is entered, if the Commission 
determines that the Federal court proceeding has resulted in an 
evidentiary record that is likely materially to facilitate resolution of 
the administrative proceeding in accordance with the expedited schedule 
set forth in this section. The Commission will provide each respondent 
with written notice of any such determination.
    (2) Election. A respondent that determines to elect fast-track 
procedures shall file a notice of such election with the Secretary by 
the latest of: three days after entry of a preliminary injunction as 
described in paragraph (b)(1)(i) of this section; three days after the 
respondent is served with notice of the Commission's determination under 
paragraph (b)(1)(ii) of this section; or three days after the respondent 
is served with the Commission's administrative complaint in the 
adjudicative proceeding. In proceedings involving multiple respondents, 
the fast-track procedures set forth in this section will not apply 
unless the procedures are elected by all respondents.
    (c) Deadlines in fast-track proceedings. (1) For purposes of this 
paragraph, ``triggering event'' means the latest of: entry of a 
preliminary injunction as described in paragraph (b)(1)(i) of this 
section; service on the last respondent of notice of the Commission's 
determination under paragraph (b)(1)(ii) of this section; service on the 
last respondent of the Commission's administrative complaint in the 
adjudicative proceeding; or filing with the Secretary by the last 
respondent of a notice electing fast-track procedures.
    (2) Proceedings before the Administrative Law Judge. In fast-track 
proceedings covered by this section:
    (i) The scheduling conference required by Sec. 3.21(b) shall be 
held not later than three days after the triggering event.
    (ii) Respondent's answer shall be filed within 14 days after the 
triggering event.
    (iii) The Administrative Law Judge shall file an initial decision 
within 56

[[Page 49]]

days following the conclusion of the evidentiary hearing. The initial 
decision shall be filed no later than 195 days after the triggering 
event.
    (iv) Any party wishing to appeal an initial decision to the 
Commission shall file a notice of appeal with the Secretary within three 
days after service of the initial decision. The notice shall comply with 
Sec. 3.52(a) in all other respects.
    (v) The appeal shall be in the form of a brief, filed within 21 days 
after service of the initial decision, and shall comply with Sec. 
3.52(b) in all other respects. All issues raised on appeal shall be 
presented in the party's appeal brief.
    (vi) Within 14 days after service of the appeal brief, the appellee 
may file an answering brief, which shall comply with Sec. 3.52(c). 
Cross-appeals, as permitted in Sec. 3.52(c), may not be raised in an 
appellee's answering brief.
    (vii) Within five days after service of the appellee's answering 
brief, the appellant may file a reply brief, in accordance with Sec. 
3.52(d) in all other respects.
    (3) Proceedings before the Commission. In fast-track proceedings 
covered by this section, the Commission will issue a final order and 
opinion within 13 months after the triggering event. If the adjudicative 
proceeding is stayed pursuant to a motion filed under Sec. 3.26, the 
13-month deadline will be tolled for as long as the proceeding is 
stayed. The Commission may extend the date for issuance of the 
Commission's final order and opinion in the following circumstances: if 
necessary to permit the Commission to provide submitters of in camera 
material or information with advance notice of the Commission's 
intention to disclose all or portions of such material or information in 
the Commission's final order or opinion; or if the Commission determines 
that adherence to the 13-month deadline would result in a miscarriage of 
justice due to circumstances unforeseen at the time of respondent's 
election of fast-track procedures.

[63 FR 7527, Feb. 13, 1998]



Sec. 3.12  Answer.

    (a) Time for filing. A respondent shall file an answer within twenty 
(20) days after being served with the complaint; Provided, however, That 
the filing of a motion permitted under these Rules shall alter this 
period of time as follows, unless a different time is fixed by the 
Administrative Law Judge:
    (1) If the motion is denied, the answer shall be filed within ten 
(10) days after service of the order of denial or thirty (30) days after 
service of the complaint, whichever is later;
    (2) If a motion for more definite statement of the charges is 
granted, in whole or in part, the more definite statement of the charges 
shall be filed within ten (10) days after service of the order granting 
the motion and the answer shall be filed within ten (10) days after 
service of the more definite statement of the charges.
    (b) Content of answer. An answer shall conform to the following:
    (1) If allegations of complaint are contested. An answer in which 
the allegations of a complaint are contested shall contain:
    (i) A concise statement of the facts constituting each ground of 
defense;
    (ii) Specific admission, denial, or explanation of each fact alleged 
in the complaint or, if the respondent is without knowledge thereof, a 
statement to that effect. Allegations of a complaint not thus answered 
shall be deemed to have been admitted.
    (2) If allegations of complaint are admitted. If the respondent 
elects not to contest the allegations of fact set forth in the 
complaint, his answer shall consist of a statement that he admits all of 
the material allegations to be true. Such an answer shall constitute a 
waiver of hearings as to the facts alleged in the complaint, and 
together with the complaint will provide a record basis on which the 
Administrative Law Judge shall file an initial decision containing 
appropriate findings and conclusions and an appropriate order disposing 
of the proceeding. In such an answer, the respondent may, however, 
reserve the right to submit proposed findings and conclusions under 
Sec. 3.46 and the right to appeal the initial decision to the 
Commission under Sec. 3.52.
    (c) Default. Failure of the respondent to file an answer within the 
time provided shall be deemed to constitute a

[[Page 50]]

waiver of the respondent's right to appear and contest the allegations 
of the complaint and to authorize the Administrative Law Judge, without 
further notice to the respondent, to find the facts to be as alleged in 
the complaint and to enter an initial decision containing such findings, 
appropriate conclusions, and order.

[32 FR 8449, June 13, 1967, as amended at 50 FR 53305, Dec. 31, 1985; 61 
FR 50646, Sept. 26, 1996; 66 FR 17628, Apr. 3, 2001; 66 FR 20527, Apr. 
23, 2001]



Sec. 3.13  Adjudicative hearing on issues arising in rulemaking 
proceedings under the Fair Packaging and Labeling Act.

    (a) Notice of hearing. When the Commission, acting under Sec. 
1.26(g) of this chapter, determines that objections which have been 
filed are sufficient to warrant the holding of an adjudicative hearing 
in rulemaking proceedings under the Fair Packaging and Labeling Act, or 
when the Commission otherwise determines that the holding of such a 
hearing would be in the public interest, a hearing will be held before 
an Administrative Law Judge for the purpose of receiving evidence 
relevant and material to the issues raised by such objections or other 
issues specified by the Commission. In such case the Commission will 
publish a notice in the Federal Register containing a statement of:
    (1) The provisions of the rule or order to which objections have 
been filed;
    (2) The issues raised by the objections or the issues on which the 
Commission wishes to receive evidence;
    (3) The time and place for hearing, the time to be at least thirty 
(30) days after publication of the notice; and
    (4) The time within which, and the conditions under which, any 
person who petitioned for issuance, amendment, or repeal of the rule or 
order, or any person who filed objections sufficient to warrant the 
holding of the hearing, or any other interested person, may file notice 
of intention to participate in the proceeding.
    (b) Parties. Any person who petitions for issuance, amendment, or 
repeal of a rule or order, and any person who files objections 
sufficient to warrant the holding of a hearing, and who files timely 
notice of intention to participate, shall be regarded as a party and 
shall be individually served with any pleadings filed in the proceeding. 
Upon written application to the Administrative Law Judge and a showing 
of good cause, any interested person may be designated by the 
Administrative Law Judge as a party.

[32 FR 8449, June 13, 1967, as amended at 40 FR 33969, Aug. 13, 1975]



Sec. 3.14  Intervention.

    (a) Any individual, partnership, unincorporated association, or 
corporation desiring to intervene in an adjudicative proceeding shall 
make written application in the form of a motion setting forth the basis 
therefor. Such application shall have attached to it a certificate 
showing service thereof upon each party to the proceeding in accordance 
with the provisions of Sec. 4.4(b) of this chapter. A similar 
certificate shall be attached to the answer filed by any party, other 
than counsel in support of the complaint, showing service of such answer 
upon the applicant. The Administrative Law Judge or the Commission may 
by order permit the intervention to such extent and upon such terms as 
are provided by law or as otherwise may be deemed proper.
    (b) In an adjudicative proceeding where the complaint states that 
divestiture relief is contemplated, the labor organization[s] 
representing employees of the respondent[s] may intervene as a matter of 
right. Applications for such intervention are to be made in accordance 
with the procedures set forth in paragraph (a) of this section and must 
be filed within 60 days of the issuance of the complaint. Intervention 
as a matter of right shall be limited to the issue of the effect, if 
any, of proposed remedies on employment, with full rights of 
participation in the proceeding concerning this issue. This paragraph 
does not affect a labor organization's ability to petition for leave to 
intervene pursuant to Sec. 3.14(a).

[32 FR 8449, June 13, 1967, as amended at 46 FR 20979, Apr. 8, 1981]

[[Page 51]]



Sec. 3.15  Amendments and supplemental pleadings.

    (a) Amendments--(1) By leave. If and whenever determination of a 
controversy on the merits will be facilitated thereby, the 
Administrative Law Judge may, upon such conditions as are necessary to 
avoid prejudicing the public interest and the rights of the parties, 
allow appropriate amendments to pleadings or notice of hearing: 
Provided, however, That a motion for amendment of a complaint or notice 
may be allowed by the Administrative Law Judge only if the amendment is 
reasonably within the scope of the original complaint or notice. Motions 
for other amendments of complaints or notices shall be certified to the 
Commission.
    (2) Conformance to evidence. When issues not raised by the pleadings 
or notice of hearing but reasonably within the scope of the original 
complaint or notice of hearing are tried by express or implied consent 
of the parties, they shall be treated in all respects as if they had 
been raised in the pleadings or notice of hearing; and such amendments 
of the pleadings or notice as may be necessary to make them conform to 
the evidence and to raise such issues shall be allowed at any time.
    (b) Supplemental pleadings. The Administrative Law Judge may, upon 
reasonable notice and such terms as are just, permit service of a 
supplemental pleading or notice setting forth transactions, occurrences, 
or events which have happened since the date of the pleading or notice 
sought to be supplemented and which are relevant to any of the issues 
involved.



Subpart C_Prehearing Procedures; Motions; Interlocutory Appeals; Summary 
                                Decisions



Sec. 3.21  Prehearing procedures.

    (a) Meeting of the parties before scheduling conference. An early as 
practicable before the prehearing scheduling conference described in 
paragraph (b) of this section, counsel for the parties shall meet to 
discuss the nature and basis of their claims and defenses and the 
possibilities for a prompt settlement or resolution of the case, and to 
agree, if possible, on a proposed discovery schedule, a preliminary 
estimate of the time required for the hearing, and a proposed hearing 
date, and on any other matters to be determined at the scheduling 
conference.
    (b) Scheduling conference. Not later than fourteen (14) days after 
the answer is filed by the last answering respondent, the Administrative 
Law Judge shall hold a scheduling conference. At the scheduling 
conference, counsel for the parties shall be prepared to address their 
factual and legal theories, a schedule of proceedings, possible 
limitations on discovery, and other possible agreements or steps that 
may aid in the orderly and expeditious disposition of the proceeding.
    (c) Prehearing scheduling order. (1) Not later than two (2) days 
after the scheduling conference, the Administrative Law Judge shall 
enter an order that sets forth the results of the conference and 
establishes a schedule of proceedings, including a plan of discovery, 
dates for the submission and hearing of motions, the specific method by 
which exhibits shall be numbered or otherwise identified and marked for 
the record, and the time and place of a final prehearing conference and 
of the evidentiary hearing.
    (2) The Administrative Law Judge may grant a motion to extend any 
deadline or time specified in this scheduling order only upon a showing 
of good cause. Such motion shall set forth the total period of 
extensions, if any, previously obtained by the moving party. In 
determining whether to grant the motion, the Administrative Law Judge 
shall consider any extensions already granted, the length of the 
proceedings to date, and the need to conclude the evidentiary hearing 
and render an initial decision in a timely manner. The Administrative 
Law Judge shall not rule on ex parte motions to extend the deadlines 
specified in the scheduling order, or modify such deadlines solely upon 
stipulation or agreement of counsel.
    (d) Meeting prior to final prehearing conference. Counsel for the 
parties shall meet before the final prehearing conference described in 
paragraph (e) of this section to discuss the matters set

[[Page 52]]

forth therein in preparation for the conference.
    (e) Final prehearing conference. As close to the commencement of the 
evidentiary hearing as practicable, the Administrative Law Judge shall 
hold a final prehearing conference, which counsel shall attend in 
person, to submit any proposed stipulations as to law, fact, or 
admissibility of evidence, exchange exhibit and witness lists, and 
designate testimony to be presented by deposition. At this conference, 
the Administrative Law Judge shall also resolve any outstanding 
evidentiary matters or pending motions (except motions for summary 
decision) and establish a final schedule for the evidentiary hearing.
    (f) Additional prehearing conferences and orders. The Administrative 
Law Judge shall hold additional prehearing and status conferences or 
enter additional orders as may be needed to ensure the orderly and 
expeditious disposition of a proceeding. Such conferences shall be held 
in person to the extent practicable.
    (g) Public access and reporting. Prehearing conferences shall be 
public unless the Administrative Law Judge determines in his or her 
discretion that the conference (or any part thereof) shall be closed to 
the public. The Administrative Law Judge shall have discretion to 
determine whether a prehearing conference shall be stenographically 
reported.

[50 FR 41487, Oct. 11, 1985, as amended at 61 FR 50646, Sept. 26, 1996; 
66 FR 17628, Apr. 3, 2001]



Sec. 3.22  Motions.

    (a) Presentation and disposition. During the time a proceeding is 
before an Administrative Law Judge, all motions therein, except those 
filed under Sec. 3.26, Sec. 3.42(g), or Sec. 4.17, shall be addressed 
to and ruled upon, if within his or her authority, by the Administrative 
Law Judge. The Administrative Law Judge shall certify to the Commission 
any motion upon which he or she has no authority to rule, accompanied by 
any recommendation that he or she may deem appropriate. Such 
recommendation may contain a proposed disposition of the motion or other 
relevant comments. The Commission may order the ALJ to submit a 
recommendation or an amplification thereof. Rulings or recommendations 
containing information granted in camera status pursuant to Sec. 3.45 
shall be filed in accordance with Sec. 3.45(f). All written motions 
shall be filed with the Secretary of the Commission, and all motions 
addressed to the Commission shall be in writing. The moving party shall 
also provide a copy of its motion to the Administrative Law Judge at the 
time the motion is filed with the Secretary.
    (b) Content. All written motions shall state the particular order, 
ruling, or action desired and the grounds therefor. They must also 
include the name, address, telephone number, fax number, and e-mail 
address (if any) of counsel and attach a draft order containing the 
proposed relief. If a party includes in a motion information that has 
been granted in camera status pursuant to Sec. 3.45(b) or is subject to 
confidentiality protections pursuant to a protective order, the party 
shall file two versions of the motion in accordance with the procedures 
set forth in Sec. 3.45(e). The party shall mark its confidential 
filings with brackets or similar conspicuous markings to indicate the 
material for which it is claiming confidential treatment. The time 
period specified by Sec. 3.22(c) within which an opposing party may 
file an answer will begin to run upon service on that opposing party of 
the confidential version of the motion.
    (c) Answers. Within ten (10) days after service of any written 
motion, or within such longer or shorter time as may be designated by 
the Administrative Law Judge or the Commission, the opposing party shall 
answer or shall be deemed to have consented to the granting of the 
relief asked for in the motion. If an opposing party includes in an 
answer information that has been granted in camera status pursuant to 
Sec. 3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the opposing party shall file two versions of the 
answer in accordance with the procedures set forth in Sec. 3.45(e). The 
moving party shall have no right to reply, except as permitted by the 
Administrative Law Judge or the Commission.

[[Page 53]]

    (d) Motions for extensions. The Administrative Law Judge or the 
Commission may waive the requirements of this section as to motions for 
extensions of time; however, the Administrative Law Judge shall have no 
authority to rule on ex parte motions for extensions of time.
    (e) Rulings on motions for dismissal. When a motion to dismiss a 
complaint or for other relief is granted with the result that the 
proceeding before the Administrative Law Judge is terminated, the 
Administrative Law Judge shall file an initial decision in accordance 
with the provisions of Sec. 3.51. If such a motion is granted as to all 
charges of the complaint in regard to some, but not all, of the 
respondents, or is granted as to any part of the charges in regard to 
any or all of the respondents, the Administrative Law Judge shall enter 
his ruling on the record, in accordance with the procedures set forth in 
paragraph (a) of this section, and take it into account in his initial 
decision. When a motion to dismiss is made at the close of the evidence 
offered in support of the complaint based upon an alleged failure to 
establish a prima facie case, the Administrative Law Judge may defer 
ruling thereon until immediately after all evidence has been received 
and the hearing record is closed.
    (f) Statement. Each motion to quash filed pursuant to Sec. 3.34(c), 
each motion to compel or determine sufficiency pursuant to Sec. 
3.38(a), each motion for sanctions pursuant to Sec. 3.38(b), and each 
motion for enforcement pursuant to Sec. 3.38(c) shall be accompanied by 
a signed statement representing that counsel for the moving party has 
conferred with opposing counsel in an effort in good faith to resolve by 
agreement the issues raised by the motion and has been unable to reach 
such an agreement. If some of the matters in controversy have been 
resolved by agreement, the statement shall specify the matters so 
resolved and the matters remaining unresolved. The statement shall 
recite the date, time, and place of each such conference between 
counsel, and the names of all parties participating in each such 
conference. Unless otherwise ordered by the Administrative Law Judge, 
the statement required by this rule must be filed only with the first 
motion concerning compliance with the discovery demand at issue.

[32 FR 8449, June 13, 1967, as amended at 50 FR 42672, Oct. 22, 1985; 52 
FR 22293, June 11, 1987; 60 FR 39641, Aug. 3, 1995; 61 FR 50647, Sept. 
26, 1996; 66 FR 17628, Apr. 3, 2001]



Sec. 3.23  Interlocutory appeals.

    (a) Appeals without a determination by the Administrative Law Judge. 
The Commission may, in its discretion, entertain interlocutory appeals 
where a ruling of the Administrative Law Judge:
    (1) Requires the disclosure of rec ords of the Commission or another 
governmental agency or the appearance of an official or employee of the 
Commission or another governmental agency pursuant to Sec. 3.36, if 
such appeal is based solely on a claim of privilege: Provided, that The 
Administrative Law Judge shall stay until further order of the 
Commission the effectiveness of any ruling, whether or not appeal is 
sought, that requires the disclosure of nonpublic Commission minutes, 
Commissioner circulations, or similar documents prepared by the 
Commission, individual Commissioner, or the Office of the General 
Counsel;
    (2) Suspends an attorney from participation in a particular 
proceeding pursuant to Sec. 3.42(d); or
    (3) Grants or denies an application for intervention pursuant to the 
provisions of Sec. 3.14.

Appeal from such rulings may be sought by filing with the Commission an 
application for review, not to exceed fifteen (15) pages exclusive of 
those attachments required below, within five (5) days after notice of 
the Administrative Law Judge's ruling. Answer thereto may be filed 
within five (5) days after service of the application for review. The 
application for review should specify the person or party taking the 
appeal; should attach the ruling or part thereof from which appeal is 
being taken and any other portions of the record on which the moving 
party relies; and should specify under which provisions hereof review is 
being sought. The Commission upon its own motion may enter an order 
staying the return date of an order issued by the Administrative Law 
Judge pursuant to

[[Page 54]]

Sec. 3.36 or placing the matter on the Commission's docket for review. 
Any order placing the matter on the Commission's docket for review will 
set forth the scope of the review and the issues which will be 
considered and will make provision for the filing of briefs if deemed 
appropriate by the Commission.
    (b) Appeals upon a determination by the Administrative Law Judge. 
Except as provided in paragraph (a) of this section, applications for 
review of a ruling by the Administrative Law Judge may be allowed only 
upon request made to the Administrative Law Judge and a determination by 
the Administrative Law Judge in writing, with justification in support 
thereof, that the ruling involves a controlling question of law or 
policy as to which there is substantial ground for difference of opinion 
and that an immediate appeal from the ruling may materially advance the 
ultimate termination of the litigation or subsequent review will be an 
inadequate remedy. Applications for review in writing may be filed, not 
to exceed fifteen (15) pages exclusive of those attachments required 
below, within five (5) days after notice of the Administrative Law 
Judge's determination. Additionally, the moving party is required to 
attach the ruling or part thereof from which appeal is being taken and 
any other portions of the record on which the moving party is relying. 
Answer thereto may be filed within five (5) days after service of the 
application for review. The Commission may thereupon, in its discretion, 
permit an appeal. Commission review, if permitted, will be confined to 
the application for review and answer thereto, without oral argument or 
further briefs, unless otherwise ordered by the Commission.
    (c) Proceedings not stayed. Application for review and appeal 
hereunder shall not stay proceedings before the Administrative Law Judge 
unless the Judge or the Commission shall so order.

[37 FR 5608, Mar. 17, 1972, as amended at 42 FR 31591, June 22, 1977; 42 
FR 33025, June 29, 1977; 43 FR 56902 Dec. 5, 1978; 50 FR 53305, Dec. 31, 
1985]



Sec. 3.24  Summary decisions.

    (a) Procedure. (1) Any party to an adjudicatory proceeding may move, 
with or without supporting affidavits, for a summary decision in the 
party's favor upon all or any part of the issues being adjudicated. The 
motion shall be accompanied by a separate and concise statement of the 
material facts as to which the moving party contends there is not 
genuine issue. Counsel in support of the complaint may so move at any 
time after twenty (20) days following issuance of the complaint and any 
party respondent may so move at any time after issuance of the 
complaint. Any such motion by any party, however, shall be filed in 
accordance with the scheduling order issued pursuant to Sec. 3.21, but 
in any case at least twenty (20) days before the date fixed for the 
adjudicatory hearing.
    (2) Any other party may, within ten (10) days after service of the 
motion, file opposing affidavits. The opposing party shall include a 
separate and concise statement of those material facts as to which the 
opposing party contends there exists a genuine issue for trial, as 
provided in Sec. 3.24(a)(3). The Administrative Law Judge may, in his 
discretion, set the matter for oral argument and call for the submission 
of briefs or memoranda. If a party includes in any such brief or 
memorandum information that has been granted in camera status pursuant 
to Sec. 3.45(b) or is subject to confidentiality protections pursuant 
to a protective order, the party shall file two versions of the document 
in accordance with the procedures set forth in Sec. 3.45(e). The 
decision sought by the moving party shall be rendered within thirty (30) 
days after the opposition or any final brief ordered by the 
Administrative Law Judge is filed, if the pleadings and any depositions, 
answers to interrogatories, admissions on file, and affidavits show that 
there is no genuine issue as to any material fact and that the moving 
party is entitled to such decision as a matter of law. Any such decision 
shall constitute the initial decision of the Administrative Law Judge 
and shall accord with the procedures set forth in Sec. 3.51(c). A 
summary decision, interlocutory in character and in compliance with the 
procedures set forth in Sec. 3.51(c), may be rendered on the issue of 
liability alone although

[[Page 55]]

there is a genuine issue as to the nature and extent of relief.
    (3) Affidavits shall set forth such facts as would be admissible in 
evidence and shall show affirmatively that the affiant is competent to 
testify to the matters stated therein. The Administrative Law Judge may 
permit affidavits to be supplemented or opposed by depositions, answers 
to interrogatories, or further affidavits. When a motion for summary 
decision is made and supported as provided in this rule, a party 
opposing the motion may not rest upon the mere allegations or denials of 
his pleading; his response, by affidavits or as otherwise provided in 
this rule, must set forth specific facts showing that there is a genuine 
issue of fact for trial. If no such response is filed, summary decision, 
if appropriate, shall be rendered.
    (4) Should it appear from the affidavits of a party opposing the 
motion that he cannot, for reasons stated, present by affidavit facts 
essential to justify his opposition, the Administrative Law Judge may 
refuse the application for summary decision or may order a continuance 
to permit affidavits to be obtained or depositions to be taken or 
discovery to be had or make such other order as is appropriate and a 
determination to that effect shall be made a matter of record.
    (5) If on motion under this rule a summary decision is not rendered 
upon the whole case or for all the relief asked and a trial is 
necessary, the Administrative Law Judge shall make an order specifying 
the facts that appear without substantial controversy and directing 
further proceedings in the action. The facts so specified shall be 
deemed established.
    (b) Affidavits filed in bad faith. (1) Should it appear to the 
satisfaction of the Administrative Law Judge at any time that any of the 
affidavits presented pursuant to this rule are presented in bad faith, 
or solely for the purpose of delay, or are patently frivolous, the 
Administrative Law Judge shall enter a determination to that effect upon 
the record.
    (2) If upon consideration of all relevant facts attending the 
submission of any affidavit covered by paragraph (b)(1) of this section, 
the Administrative Law Judge concludes that action by him to suspend or 
remove an attorney from the case is warranted, he shall take action as 
specified in Sec. 3.42(d). If the Administrative Law Judge concludes, 
upon consideration of all the relevant facts attending the submission of 
any affidavit covered by paragraph (b)(1) of this section, that the 
matter should be certified to the Commission for consideration of 
disciplinary action against an attorney, including reprimand, suspension 
or disbarment, the examiner shall certify the matter, with his findings 
and recommendations, to the Commission for its consideration of 
disciplinary action in the manner provided by the Commission's rules.

[35 FR 5007, Mar. 24, 1970, as amended at 50 FR 53305, Dec. 31, 1985; 52 
FR 22293, June 11, 1987; 61 FR 50647, Sept. 26, 1996; 66 FR 17628, Apr. 
3, 2001]



Sec. 3.25  Consent agreement settlements.

    (a) The Administrative Law Judge may, in his discretion and without 
suspension of prehearing procedures, hold conferences for the purpose of 
supervising negotiations for the settlement of the case, in whole or in 
part, by way of consent agreement.
    (b) A proposal to settle a matter in adjudication by consent 
agreement shall be submitted by way of a motion to withdraw the matter 
from adjudication for the purpose of considering the proposed consent 
agreement. Such motion shall be filed with the Secretary of the 
Commission, as provided in Sec. 4.2. Any such motion shall be 
accompanied by a proposed consent agreement containing a proposed order 
executed by one or more respondents and conforming to the requirements 
of Sec. 2.32; the proposed consent agreement itself, however, shall not 
be placed on the public record unless and until it is accepted by the 
Commission as provided herein. If the proposed consent agreement affects 
only some of the respondents or resolves only some of the charges in 
adjudication, the motion required by this subsection shall so state and 
shall specify the portions of the matter that the proposal would 
resolve.
    (c) If the proposed consent agreement accompanying the motion has 
also

[[Page 56]]

been executed by complaint counsel and approved by the appropriate 
Bureau Director, the Secretary shall issue an order withdrawing from 
adjudication those portions of the matter that the proposal would 
resolve and all proceedings before the Administrative Law Judge shall be 
stayed with respect to such portions, pending a determination by the 
Commission pursuant to paragraph (f) of this section.
    (d) If the proposed consent agreement accompanying the motion has 
not been executed by complaint counsel, the Administrative Law Judge may 
certify the motion and agreement to the Commission together with his 
recommendation if he determines, in writing, that there is a likelihood 
of settlement. The filing of a motion under this subsection and 
certification thereof to the Commission shall not stay proceedings 
before the Administrative Law Judge unless the Administrative Law Judge 
or the Commission shall so order. Upon certification of a motion 
pursuant to this subsection, the Commission may, if it is satisfied that 
there is a likelihood of settlement, issue an order withdrawing from 
adjudication those portions of the matter that the proposal would 
resolve, for the purpose of considering the proposed consent agreement.
    (e) The Commission will treat those portions of a matter withdrawn 
from adjudication pursuant to paragraph (c) or (d) of this section as 
being in a nonadjudicative status. Portions not so withdrawn shall 
remain in an adjudicative status.
    (f) After some or all of allegations in a matter have been withdrawn 
from adjudication, the Commission may accept the proposed consent 
agreement, reject it and return the matter or affected portions thereof 
to adjudication for further proceedings or take such other action as it 
may deem appropriate. If the agreement is accepted, it will be disposed 
of as provided in Sec. 2.34 of this chapter, except that if, following 
the public comment period provided for in Sec. 2.34, the Commission 
decides, based on comments received or otherwise, to withdraw its 
acceptance of such an agreement, it will so notify the parties and will 
return to adjudication any portions of the matter previously withdrawn 
from adjudication for further proceedings or take such other action it 
considers appropriate.
    (g) This rule will not preclude the settlement of the case by 
regular adjudicatory process through the filing of an admission answer 
or submission of the case to the Administrative Law Judge on a 
stipulation of facts and an agreed order.

[40 FR 15236, Apr. 4, 1975, as amended at 42 FR 39659, Aug. 5, 1977; 43 
FR 51758, Nov. 7, 1978; 50 FR 53305, Dec. 31, 1985; 54 FR 18885, May 3, 
1989; 61 FR 50431, Sept. 26, 1996; 61 FR 50647, Sept. 26, 1996; 64 FR 
46269, Aug. 25, 1999; 66 FR 64143, Dec. 12, 2001]



Sec. 3.26  Motions following denial of preliminary injunctive relief.

    (a) This section sets forth two procedures by which respondents may 
obtain consideration of whether continuation of an adjudicative 
proceeding is in the public interest after a court has denied 
preliminary injunctive relief in a separate proceeding brought, under 
section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), in 
aid of the adjudication.
    (b) A motion under this section shall be addressed to the Commission 
and filed with the Secretary of the Commission. Such a motion must be 
filed within fourteen (14) days after:
    (1) A district court has denied preliminary injunctive relief, all 
opportunity has passed for the Commission to seek reconsideration of the 
denial or to appeal it, and the Commission has neither sought 
reconsideration of the denial nor appealed it; or
    (2) A court of appeals has denied preliminary injunctive relief.
    (c) Withdrawal from adjudication. If a court has denied preliminary 
injunctive relief to the Commission in a section 13(b) proceeding 
brought in aid of an adjudicative proceeding, respondents may move that 
the adjudicative proceeding be withdrawn from adjudication in order to 
consider whether or not the public interest warrants further litigation. 
Such a motion shall be filed by all of the respondents in the 
adjudicative proceeding. The Secretary shall issue an order withdrawing 
the matter from adjudication two days after such a motion is filed, 
except

[[Page 57]]

that, if complaint counsel have objected that the conditions of 
paragraph (b) of this section have not been met, the Commission shall 
determine whether to withdraw the matter from adjudication.
    (d) Consideration on the record. (1) In lieu of a motion to withdraw 
a matter from adjudication under paragraph (c) of this section, any 
respondent or respondents may file a motion under this paragraph to 
dismiss the administrative complaint on the basis that the public 
interest does not warrant further litigation after a court has denied 
preliminary injunctive relief to the Commission. Motions filed under 
this paragraph shall incorporate or be accompanied by a supporting brief 
or memorandum.
    (2) Stay. A motion under this paragraph will stay all proceedings 
before the Administrative Law Judge until such time as the Commission 
directs otherwise.
    (3) Answer. Within fourteen (14) days after service of a motion 
filed under this paragraph, complaint counsel may file an answer.
    (4) Form. Motions (including any supporting briefs and memoranda) 
and answers under this paragraph shall not exceed 30 pages if printed, 
or 45 pages if typewritten, and shall comply with the requirements of 
Sec. 3.52(e).
    (5) In camera materials. If any filing includes materials that are 
subject to confidentiality protections pursuant to an order entered in 
either the proceeding under section 13(b) or in the proceeding under 
this part, such materials shall be treated as In camera materials for 
purposes of this paragraph and the party shall file two versions of the 
document in accordance with the procedures set forth in Sec. 3.45(e). 
The time within which complaint counsel may file an answer under this 
paragraph will begin to run upon service of the in camera version of the 
motion (including any supporting briefs and memoranda).

[60 FR 39641, Aug. 3, 1995]



                 Subpart D_Discovery; Compulsory Process



Sec. 3.31  General provisions.

    (a) Discovery methods. Parties may obtain discovery by one or more 
of the following methods: Depositions upon oral examination or written 
questions; written interrogatories; production of documents or things 
for inspection and other purposes; and requests for admission. Unless 
the Administrative Law Judge orders otherwise, the frequency or sequence 
of these methods is not limited. The parties shall, to the greatest 
extent practicable, conduct discovery simultaneously; the fact that a 
party is conducting discovery shall not operate to delay any other 
party's discovery.
    (b) Initial disclosures. Complaint counsel and respondent's counsel 
shall, within five (5) days of receipt of a respondent's answer to the 
complaint and without awaiting a discovery request, provide to each 
other:
    (1) The name, and, if known, the address and telephone number of 
each individual likely to have discoverable information relevant to the 
allegations of the Commission's complaint, to the proposed relief, or to 
the defenses of the respondent, as set forth in Sec. 3.31(c)(1);
    (2) A copy of, or a description by category and location of, all 
documents, data compilations, and tangible things in the possession, 
custody, or control of the Commission or respondent(s) that are relevant 
to the allegations of the Commission's complaint, to the proposed 
relief, or to the defenses of the respondent, as set forth in Sec. 
3.31(c)(1); unless such information or materials are privileged as 
defined in Sec. 3.31(c)(2), pertain to hearing preparation as defined 
in Sec. 3.31(c)(3), pertain to experts as defined in Sec. 3.31(c)(4), 
or are obtainable from some other source that is more convenient, less 
burdensome, or less expensive. A party shall make its disclosures based 
on the information then reasonably available to it and is not excused 
from making its disclosures because it has not fully completed its 
investigation.
    (3) In addition to the disclosures required by paragraphs (b)(1) and 
(2), of this section, the parties shall disclose

[[Page 58]]

to each other the identity of any person who may be used at trial to 
present evidence as an expert. Except as otherwise stipulated or 
directed by the Administrative Law Judge, this disclosure shall, with 
respect to a witness who is retained or specially employed to provide 
expert testimony in the case or whose duties as an employee of the party 
regularly involve giving expert testimony, be accompanied by a written 
report prepared and signed by the witness. The report shall contain a 
complete statement of all opinions to be expressed and the basis and 
reasons therefor; the data or other information considered by the 
witness in forming the opinions; any exhibits to be used as a summary of 
or support for the opinions; the qualifications of the witness, 
including a list of all publications authored by the witness within the 
preceding ten years; the compensation to be paid for the study and 
testimony; and a listing of any other cases in which the witness has 
testified as an expert at trial or by deposition within the preceding 
four years. These disclosures shall be made at the times and in the 
sequence directed by the Administrative Law Judge. In the absence of 
other directions from the Administrative Law Judge or stipulation by the 
parties, the disclosures shall be made at least 90 days before the trial 
date or the date the case is to be ready for trial or, if the evidence 
is intended solely to contradict or rebut proposed expert testimony on 
the same subject matter identified by another party under this 
paragraph, within 30 days after the disclosure made by the other party.
    (c) Scope of discovery. Unless otherwise limited by order of the 
Administrative Law Judge or the Commission in accordance with these 
rules, the scope of discovery is as follows:
    (1) In general; limitations. Parties may obtain discovery to the 
extent that it may be reasonably expected to yield information relevant 
to the allegations of the complaint, to the proposed relief, or to the 
defenses of any respondent. Such information may include the existence, 
description, nature, custody, condition and location of any books, 
documents, or other tangible things and the identity and location of 
persons having any knowledge of any discoverable matter. Information may 
not be withheld from discovery on grounds that the information will be 
inadmissible at the hearing if the information sought appears reasonably 
calculated to lead to the discovery of admissible evidence. The 
frequency or extent of use of the discovery methods otherwise permitted 
under these rules shall be limited by the Administrative Law Judge if he 
determines that:
    (i) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (ii) The party seeking discovery has had ample opportunity by 
discovery in the action to obtain the information sought; or
    (iii) The burden and expense of the proposed discovery outweigh its 
likely benefit.
    (2) Privilege. The Administrative Law Judge may enter a protective 
order denying or limiting discovery to preserve the privilege of a 
witness, person, or governmental agency as governed by the Constitution, 
any applicable act of Congress, or the principles of the common law as 
they may be interpreted by the Commission in the light of reason and 
experience.
    (3) Hearing preparations: Materials. Subject to the provisions of 
paragraph (c)(4) of this section, a party may obtain discovery of 
documents and tangible things otherwise discoverable under paragraph 
(c)(1) of this section and prepared in anticipation of litigation or for 
hearing by or for another party or by or for that other party's 
representative (including the party's attorney, consultant, or agent) 
only upon a showing that the party seeking discovery has substantial 
need of the materials in the preparation of its case and that the party 
is unable without undue hardship to obtain the substantial equivalent of 
the materials by other means. In ordering discovery of such materials 
when the required showing has been made, the Administrative Law Judge 
shall protect against disclosure of the mental impressions, conclusions, 
opinions, or legal theories of an attorney or other representative of a 
party.

[[Page 59]]

    (4) Hearing Preparation: Experts. (i) A party may depose any person 
who has been identified as an expert whose opinions may be presented at 
trial. If a report from the expert is required under Sec. 3.31(b)(3), 
the deposition shall not be conducted until after the report is 
provided.
    (A) A party may through interrogatories require any other party to 
identify each person whom the other party expects to call as an expert 
witness at hearing, to state the subject matter on which the expert is 
expected to testify, and to state the substance of the facts and 
opinions to which the expert is expected to testify and a summary of the 
grounds for each opinion.
    (B) Upon motion, the Administrative Law Judge may order further 
discovery by other means, subject to such restrictions as to scope as 
the Administrative Law Judge may deem appropriate.
    (ii) A party may discover facts known or opinions held by an expert 
who has been retained or specially employed by another party in 
anticipation of litigation or preparation for hearing and who is not 
expected to be called as a witness at hearing, only upon a showing of 
exceptional circumstances under which it is impracticable for the party 
seeking discovery to obtain facts or opinions on the same subject by 
other means.
    (d) Protective orders; order to preserve evidence. (1) The 
Administrative Law Judge may deny discovery or make any order which 
justice requires to protect a party or other person from annoyance, 
embarrassment, oppression, or undue burden or expense, or to prevent 
undue delay in the proceeding. Such an order may also be issued to 
preserve evidence upon a showing that there is substantial reason to 
believe that such evidence would not otherwise be available for 
presentation at the hearing.
    (2) [Reserved]
    (e) Supplementation of disclosures and responses. A party who has 
made an initial disclosure under Sec. 3.31(b) or responded to a request 
for discovery with a disclosure or response is under a duty to 
supplement or correct the disclosure or response to include information 
thereafter acquired if ordered by the Administrative Law Judge or in the 
following circumstances:
    (1) A party is under a duty to supplement at appropriate intervals 
its initial disclosures under Sec. 3.31(b) if the party learns that in 
some material respect the information disclosed is incomplete or 
incorrect and if the additional or corrective information has not 
otherwise been made known to the other parties during the discovery 
process or in writing.
    (2) A party is under a duty seasonably to amend a prior response to 
an interrogatory, request for production, or request for admission if 
the party learns that the response is in some material respect 
incomplete or incorrect.
    (f) Stipulations. When approved by the Administrative Law Judge, the 
parties may by written stipulation (1) provide that depositions may be 
taken before any person, at any time or place, upon any notice, and in 
any manner and when so taken may be used like other depositions, and (2) 
modify the procedures provided by these rules for other methods of 
discovery.
    (g) Ex parte rulings on applications for compulsory process. 
Applications for the issuance of subpoenas to compel testimony at an 
adjudicative hearing pursuant to Sec. 3.34 may be made ex parte, and, 
if so made, such applications and rulings thereon shall remain ex parte 
unless otherwise ordered by the Administrative Law Judge or the 
Commission.

[43 FR 56864, Dec. 4, 1978, as amended at 50 FR 53305, Dec. 31, 1985; 61 
FR 50647, Sept. 26, 1996; 66 FR 17628, Apr. 3, 2001; 66 FR 20527, Apr. 
23, 2001]



Sec. 3.32  Admissions.

    (a) At any time after thirty (30) days after issuance of complaint, 
or after publication of notice of an adjudicative hearing in a 
rulemaking proceeding under Sec. 3.13, any party may serve on any other 
party a written request for admission of the truth of any matters 
relevant to the pending proceeding set forth in the request that relate 
to statements or opinions of fact or of the application of law to fact, 
including the genuineness of any documents described in the request. 
Copies of documents shall be served with the request unless they have 
been or are otherwise furnished or are known to be, and in

[[Page 60]]

the request are stated as being, in the possession of the other party. 
Each matter of which an admission is requested shall be separately set 
forth. A copy of the request shall be filed with the Secretary.
    (b) The matter is admitted unless, within ten (10) days after 
service of the request, or within such shorter or longer time as the 
Administrative Law Judge may allow, the party to whom the request is 
directed serves upon the party requesting the admission, with a copy 
filed with the Secretary, a sworn written answer or objection addressed 
to the matter. If objection is made, the reasons therefor shall be 
stated. The answer shall specifically deny the matter or set forth in 
detail the reasons why the answering party cannot truthfully admit or 
deny the matter. A denial shall fairly meet the substance of the 
requested admission, and when good faith requires that a party qualify 
its answer or deny only a part of the matter of which an admission is 
requested, the party shall specify so much of it as is true and qualify 
or deny the remainder. An answering party may not give lack of 
information or knowledge as a reason for failure to admit or deny unless 
the party states that it has made reasonable inquiry and that the 
information known to or readily obtainable by the party is insufficient 
to enable it to admit or deny. A party who considers that a matter of 
which an admission has been requested presents a genuine issue for trial 
may not, on that ground alone, object to the request; the party may deny 
the matter or set fourth reasons why the party cannot admit or deny it.
    (c) Any matter admitted under this rule is conclusively established 
unless the Administrative Law Judge on motion permits withdrawal or 
amendment of the admission. The Administrative Law Judge may permit 
withdrawal or amendment when the presentation of the merits of the 
proceeding will be subserved thereby and the party who obtained the 
admission fails to satisfy the Administrative Law Judge that withdrawal 
or amendment will prejudice him in maintaining his action or defense on 
the merits. Any admission made by a party under this rule is for the 
purpose of the pending proceeding only and is not an admission by him 
for any other purpose nor may it be used against him in any other 
proceeding.

[43 FR 56865, Dec. 4, 1978, as amended at 50 FR 53305, Dec. 31, 1985]



Sec. 3.33  Depositions.

    (a) In general. Any party may take a deposition of a named person or 
of a person or persons described with reasonable particularity, provided 
that such deposition is reasonably expected to yield information within 
the scope of discovery under Sec. 3.31(c)(1). Such party may, by 
motion, obtain from the Administrative Law Judge an order to preserve 
relevant evidence upon a showing that there is substantial reason to 
believe that such evidence would not otherwise be available for 
presentation at the hearing. Depositions may be taken before any person 
having power to administer oaths, either under the law of the United 
States or of the state or other place in which the deposition is taken, 
who may be designated by the party seeking the deposition, provided that 
such person shall have no interest in the outcome of the proceeding. The 
party seeking the deposition shall serve upon each person whose 
deposition is sought and upon each party to the proceeding reasonable 
notice in writing of the time and place at which it will be taken, and 
the name and address of each person or persons to be examined, if known, 
and if the name is not known, a description sufficient to identify them. 
The parties may stipulate in writing or the Administrative Law Judge may 
upon motion order that a deposition be taken by telephone or other 
remote electronic means. A deposition taken by such means is deemed 
taken at the place where the deponent is to answer questions.
    (b) [Reserved]
    (c) Notice to corporation or other organization. A party may name as 
the deponent a public or private corporation, partnership, association, 
governmental agency other than the Federal Trade Commission, or any 
bureau or regional office to the Federal Trade Commission, and describe 
with reasonable particularity the matters on which examination is 
requested. The organization

[[Page 61]]

so names shall designate one or more officers, directors, or managing 
agents, or other persons who consent to testify on its behalf, and may 
set forth, for each person designated, the matters on which he will 
testify. A subpoena shall advise a non-party organization of its duty to 
make such a designation. The persons so designated shall testify as to 
matters known or reasonably available to the organization. This 
subsection does not preclude taking a deposition by any other procedure 
authorized in these rules.
    (d) Taking of deposition. Each deponent shall be duly sworn, and any 
party shall have the right to question him. Objections to questions or 
to evidence presented shall be in short form, stating the grounds of 
objections relied upon. The questions propounded and the answers 
thereto, together with all objections made, shall be recorded and 
certified by the officer. Thereafter, upon payment of the charges 
therefor, the officer shall furnish a copy of the deposition to the 
deponent and to any party.
    (e) Depositions upon written questions. A party desiring to take a 
deposition upon written questions shall serve them upon every other 
party with a notice stating:
    (1) The name and address of the person who is to answer them, and
    (2) The name or descriptive title and address of the officer before 
whom the deposition is to be taken.

A deposition upon written questions may be taken of a public or private 
corporation, partnership, association, governmental agency other than 
the Federal Trade Commission, or any bureau or regional office of the 
Federal Trade Commission in accordance with the provisions of Rule 
3.33(c). Within 30 days after the notice and written questions are 
served, any other party may serve cross questions upon all other 
parties. Within 10 days after being served with cross questions, the 
party taking the deposition may serve redirect questions upon all other 
parties. Within 10 days after being served with redirect questions, any 
other party may serve recross questions upon all other parties. The 
content of any question shall not be disclosed to the deponent prior to 
the taking of the deposition. A copy of the notice and copies of all 
questions served shall be delivered by the party taking the deposition 
to the officer designated in the notice, who shall proceed promptly to 
take the testimony of the deponent in response to the questions and to 
prepare, certify, and file or mail the deposition, attaching thereto the 
copy of the notice and the questions received by him. When the 
deposition is filed the party taking it shall promptly give notice 
thereof to all other parties.
    (f) Correction of deposition. A deposition may be corrected, as to 
form or substance, in the manner provided by Sec. 3.44(b). Any such 
deposition shall, in addition to the other required procedures, be read 
to or by the deponent and signed by him, unless the parties by 
stipulation waive the signing or the deponent is unavailable or cannot 
be found or refuses to sign. If the deposition is not signed by the 
deponent within 30 days of its submission or attempted submission, the 
officer shall sign it and certify that the signing has been waived or 
that the deponent is unavailable or that the deponent has refused to 
sign, as the case may be, together with the reason for the refusal to 
sign, if any has been given. The deposition may then be used as though 
signed unless, on a motion to suppress under Rule 3.33(g)(3)(iv), the 
Administrative Law Judge determines that the reasons given for the 
refusal to sign require rejection of the deposition in whole or in part. 
In addition to and not in lieu of the procedure for formal correction of 
the deposition, the deponent may enter in the record at the time of 
signing a list of objections to the transcription of his remarks, 
stating with specificity the alleged errors in the transcript.
    (g)(1) Use of depositions in hearings. At the hearing on the 
complaint or upon a motion, any part or all of a deposition, so far as 
admissible under the rules of evidence applied as though the witness 
were then present and testifying, may be used against any party who was 
present or represented at the taking of the deposition or who had 
reasonable notice thereof, in accordance with any of the following 
provisions:

[[Page 62]]

    (i) Any deposition may be used for the purpose of contradicting or 
impeaching the testimony of deponent as a witness.
    (ii) The deposition of a party or of anyone who at the time of 
taking the deposition was an officer, director, or managing agent, or a 
person designated to testify on behalf of a public or private 
corporation, partnership or association which is a party, or of an 
official or employee (other than a special employee) of the Commission, 
may be used by an adverse party for any purpose.
    (iii) A deposition may be used by any party for any purpose if the 
Administrative Law Judge finds:
    (A) That the deponent is dead; or
    (B) That the deponent is out of the United States or is located at 
such a distance that his attendance would be impractical, unless it 
appears that the absence of the deponent was procured by the party 
offering the deposition; or
    (C) That the deponent is unable to attend or testify because of age, 
sickness, infirmity, or imprisonment; or
    (D) That the party offering the deposition has been unable to 
procure the attendance of the deponent by subpoena; or
    (E) That such exceptional circumstances exist as to make it 
desirable, in the interest of justice and with due regard to the 
importance of presenting the testimony of witnesses orally in open 
hearing, to allow the deposition to be used.
    (iv) If only part of a deposition is offered in evidence by a party, 
any other party may introduce any other part which ought in fairness to 
be considered with the part introduced.
    (2) Objections to admissibility. Subject to the provisions of 
paragraph (g)(3) of this section, objection may be made at the hearing 
to receiving in evidence any deposition or part thereof for any reason 
which would require the exclusion of the evidence if the witness were 
then present and testifying.
    (3) Effect of errors and irregularities in depositions--(i) As to 
notice. All errors and irregularities in the notice for taking a 
deposition are waived unless written objection is promptly served upon 
the party giving the notice.
    (ii) As to disqualification of officer. Objection to taking a 
deposition because of disqualification of the officer before whom it is 
to be taken is waived unless made before the taking of the deposition 
begins or as soon thereafter as the disqualification becomes known or 
could be discovered with reasonable diligence.
    (iii) As to taking of deposition. (A) Objections to the competency 
of a witness or to the competency, relevancy, or materiality of 
testimony are not waived by failure to make them before or during the 
taking of the deposition, unless the ground of the objection is one 
which might have been obviated or removed if presented at that time.
    (B) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties, and 
errors of any kind which might be obviated, removed, or cured if 
promptly presented, are waived unless seasonable objection thereto is 
made at the taking of the deposition.
    (C) Objections to the form of written questions are waived unless 
served in writing upon all parties within the time allowed for serving 
the succeeding cross or other questions and within 5 days after service 
of the last questions authorized.
    (iv) As to completion and return of deposition. Errors and 
irregularities in the manner in which the testimony is transcribed or 
the deposition is prepared, signed, certified, endorsed, or otherwise 
dealt with by the officer are waived unless a motion to suppress the 
deposition or some part thereof is made with reasonable promptness after 
such defect is or with due diligence might have been ascertained.

[43 FR 56865, Dec. 4, 1978, as amended at 61 FR 50648, Sept. 26, 1996; 
66 FR 17629, Apr. 3, 2001]



Sec. 3.34  Subpoenas.

    (a) Subpoenas ad testificandum--(1) Prehearing. The Secretary of the 
Commission shall issue a subpoena, signed but otherwise in blank, 
requiring a person to appear and give testimony at the taking of a 
deposition to a party requesting such subpoena, who shall complete it 
before service.

[[Page 63]]

    (2) Hearing. Application for issuance of a subpoena commanding a 
person to attend and give testimony at an adjudicative hearing shall be 
made in writing to the Administrative Law Judge. Such subpoena may be 
issued upon a showing of the reasonable relevancy of the expected 
testimony.
    (b) Subpoenas duces tecum; subpoenas to permit inspection of 
premises. The Secretary of the Commission, upon request of a party, 
shall issue a subpoena, signed but otherwise in blank, commanding a 
person to produce and permit inspection and copying of designated books, 
documents, or tangible things, or commanding a person to permit 
inspection of premises, at a time and place therein specified. The 
subpoena shall specify with reasonable particularity the material to be 
produced. The person commanded by the subpoena need not appear in person 
at the place of production or inspection unless commanded to appear for 
a deposition or hearing pursuant to paragraph (a) of this section. As 
used herein, the term ``documents'' includes writings, drawings, graphs, 
charts, handwritten notes, film, photographs, audio and video recordings 
and any such representations stored on a computer, a computer disk, CD-
ROM, magnetic or electronic tape, or any other means of electronic 
storage, and other data compilations from which information can be 
obtained in machine-readable form (translated, if necessary, into 
reasonably usable form by the person subject to the subpoena). A 
subpoena duces tecum may be used by any party for purposes of discovery, 
for obtaining documents for use in evidence, or for both purposes, and 
shall specify with reasonable particularity the materials to be 
produced.
    (c) Motions to quash; limitation on subpoenas subject to Sec. 3.36. 
Any motion by the subject of a subpoena to limit or quash the subpoena 
shall be filed within the earlier of ten (10) days after service thereof 
or the time for compliance therewith. Such motions shall set forth all 
assertions of privilege or other factual and legal objections to the 
subpoena, including all appropriate arguments, affidavits and other 
supporting documentation, and shall include the statement required by 
Rule 3.22(f). Nothing in paragraphs (a) and (b) of this section 
authorizes the issuance of subpoenas requiring the appearance of, or the 
production of documents in the possession, custody, or control of, an 
official or employee of a governmental agency other than the Commission, 
or subpoenas to be served in a foreign country, which may be authorized 
only in accordance with Sec. 3.36.

[43 FR 56866, Dec. 4, 1978, as amended at 50 FR 42672, Oct. 22, 1985; 61 
FR 50648, Sept. 26, 1996; 66 FR 17629, Apr. 3, 2001]



Sec. 3.35  Interrogatories to parties.

    (a) Availability; Procedures for Use. (1) Any party may serve upon 
any other party written interrogatories, not exceeding twenty-five (25) 
in number, including all discrete subparts, to be answered by the party 
served or, if the party served is a public or private corporation, 
partnership, association or governmental agency, by any officer or 
agent, who shall furnish such information as is available to the party. 
For this purpose, information shall not be deemed to be available 
insofar as it is in the possession of the Commissioners, the General 
Counsel, the office of Administrative Law Judges, or the Secretary in 
his capacity as custodian or recorder of any such information, or their 
respective staffs.
    (2) Each interrogatory shall be answered separately and fully in 
writing under oath, unless it is objected to on grounds not raised and 
ruled on in connection with the authorization, in which event the 
reasons for objection shall be stated in lieu of an answer. The answers 
are to be signed by the person making them, and the objections signed by 
the attorney making them. The party upon whom the interrogatories have 
been served shall serve a copy of the answers, and objections, if any, 
within thirty (30) days after the service of the interrogatories. The 
Administrative Law Judge may allow a shorter or longer time.
    (b) Scope; use at hearing. (1) Interrogatories may relate to any 
matters that can be inquired into under Sec. 3.31(c)(1), and the 
answers may be used to the extent permitted by the rules of evidence.
    (2) An interrogatory otherwise proper is not necessarily 
objectionable merely because an answer to the interrogatory

[[Page 64]]

involves an opinion or contention that relates to fact or the 
application of law to fact, but the Administrative Law Judge may order 
that such an interrogatory need not be answered until after designated 
discovery has been completed or until a pre-trial conference or other 
later time.
    (c) Option to produce records. Where the answer to an interrogatory 
may be derived or ascertained from the records of the party upon whom 
the interrogatory has been served or from an examination, audit or 
inspection of such records, or from a compilation, abstract or summary 
based thereon, and the burden of deriving or ascertaining the answer is 
substantially the same for the party serving the interrogatory as for 
the party served, it is a sufficient answer to such interrogatory to 
specify the records from which the answer may be derived or ascertained 
and to afford to the party serving the interrogatory reasonable 
opportunity to examine, audit or inspect such records and to make 
copies, compilations, abstracts or summaries. The specification shall 
include sufficient detail to permit the interrogating party to identify 
readily the individual documents from which the answer may be 
ascertained.

[43 FR 56867, Dec. 4, 1978, as amended at 61 FR 50649, Sept. 26, 1996]



Sec. 3.36  Applications for subpoenas for records, or appearances 

by officials or employees, of governmental agencies other than the 
Commission, and subpoenas 
          to be served in a foreign country.

    (a) Form. An application for issuance of a subpoena for the 
production of documents, as defined in Sec. 3.34(b), or for the 
issuance of a subpoena requiring access to documents or other tangible 
things, for the purposes described in Sec. 3.37(a), in the possession, 
custody, or control of a governmental agency other than the Commission 
or the officials or employees of such other agency, or for the issuance 
of a subpoena requiring the appearance of an official or employee of 
another governmental agency, or for the issuance of a subpoena to be 
served in a foreign country, shall be made in the form of a written 
motion filed in accordance with the provisions of Sec. 3.22(a). No 
application for records pursuant to Sec. 4.11 of this chapter or the 
Freedom of Information Act may be filed with the Administrative Law 
Judge.
    (b) Content. The motion shall satisfy the same requirements for a 
subpoena under Sec. 3.34 or a request for production or access under 
Sec. 3.37, together with a specific showing that:
    (1) The material sought is reasonable in scope:
    (2) If for purposes of discovery, the material falls within the 
limits of discovery under Sec. 3.31(c)(1), or, if for an adjudicative 
hearing, the material is reasonably relevant;
    (3) The information or material sought cannot reasonably be obtained 
by other means; and
    (4) With respect to subpoenas to be served in a foreign country, 
that the party seeking discovery has a good faith belief that the 
discovery requested would be permitted by treaty, law, custom or 
practice in the country from which the discovery is sought and that any 
additional procedural requirements have been or will be met before the 
subpoena is served.
    (c) Execution. If an ALJ issues an Order authorizing a subpoena 
pursuant to this section, the moving party may forward to the Secretary 
a request for the authorized subpoena, with a copy of the authorizing 
Order attached. Each such subpoena shall be signed by the Secretary; 
shall have attached to it a copy of the authorizing Order; and shall be 
served by the moving party only in conjunction with a copy of the 
authorizing Order.

[66 FR 17629, Apr. 3, 2001; 66 FR 20527, Apr. 23, 2001]



Sec. 3.37  Production of documents and things; access for inspection 
and other purposes.

    (a) Availability; procedures for use. Any party may serve on another 
party a request: to produce and permit the party making the request, or 
someone acting on the party's behalf, to inspect and copy any designated 
documents, as defined in Sec. 3.34(b), or to inspect and copy, test, or 
sample any tangible things which are within the scope of Sec. 
3.31(c)(1) and in the possession, custody or control of the party upon 
whom the request is served; or to permit

[[Page 65]]

entry upon designated land or other property in the possession or 
control of the party upon whom the order would be served for the purpose 
of inspection and measuring, surveying, photographing, testing, or 
sampling the property or any designated object or operation thereon, 
within the scope of Sec. 3.31(c)(1). Each such request shall specify 
with reasonable particularity the documents or things to be inspected, 
or the property to be entered. Each such request shall also specify a 
reasonable time, place, and manner of making the inspection and 
performing the related acts. A party shall make documents available as 
they are kept in the usual course of business or shall organize and 
label them to correspond with the categories in the request. A person 
not a party to the action may be compelled to produce documents and 
things or to submit to an inspection as provided in Sec. 3.34.
    (b) Response; objections. The response of the party upon whom the 
request is served shall state, with respect to each item or category, 
that inspection and related activities will be permitted as requested, 
unless the request is objected to, in which event the reasons for the 
objection shall be stated. If objection is made to part of an item or 
category, the part shall be specified and inspection permitted of the 
remaining parts. The party submitting the request may move for an order 
under Sec. 3.38(a) with respect to any objection to or other failure to 
respond to the request or any part thereof, or any failure to permit 
inspection as requested.

[61 FR 50649, Sept. 26, 1996]



Sec. 3.38  Motion for order compelling disclosure or discovery; 
sanctions.

    (a) Motion for order to compel. A party may apply by motion to the 
Administrative Law Judge for an order compelling disclosure or 
discovery, including a determination of the sufficiency of the answers 
or objections with respect to the initial disclosures required by Sec. 
3.31(b), a request for admission under Sec. 3.32, a deposition under 
Sec. 3.33, or an interrogatory under Sec. 3.35.
    (1) Initial disclosures; requests for admission; depositions; 
interrogatories. Unless the objecting party sustains its burden of 
showing that the objection is justified, the Administrative Law Judge 
shall order that an answer be served or disclosure otherwise be made. If 
the Administrative Law Judge determines that an answer or other response 
by the objecting party does not comply with the requirements of these 
rules, he may order either that the matter is admitted or that an 
amended answer or response be served. The Administrative Law Judge may, 
in lieu of these orders, determine that final disposition may be made at 
a prehearing conference or at a designated time prior to trial.
    (2) Requests for production or access. If a party fails to respond 
to or comply as requested with a request for production or access made 
under Sec. 3.37(a), the discovering party may move for an order to 
compel production or access in accordance with the request.
    (b) If a party or an officer or agent of a party fails to comply 
with a subpoena or with an order including, but not limited to, an order 
for the taking of a deposition, the production of documents, or the 
answering of interrogatories, or requests for admissions, or an order of 
the Administrative Law Judge or the Commission issued as, or in 
accordance with, a ruling upon a motion concerning such an order or 
subpoena or upon an appeal from such a ruling, the Administrative Law 
Judge or the Commission, or both, for the purpose of permitting 
resolution of relevant issues and disposition of the proceeding without 
unnecessary delay despite such failure, may take such action in regard 
thereto as is just, including but not limited to the following:
    (1) Infer that the admission, testimony, documents or other evidence 
would have been adverse to the party;
    (2) Rule that for the purposes of the proceeding the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the party;
    (3) Rule that the party may not introduce into evidence or otherwise 
rely, in support of any claim or defense, upon testimony by such party, 
officer, or agent, or the documents or other evidence;
    (4) Rule that the party may not be heard to object to introduction 
and use of secondary evidence to show what the

[[Page 66]]

withheld admission, testimony, documents, or other evidence would have 
shown;
    (5) Rule that a pleading, or part of a pleading, or a motion or 
other submission by the party, concerning which the order or subpoena 
was issued, be stricken, or that a decision of the proceeding be 
rendered against the party, or both.
    (c) Any such action may be taken by written or oral order issued in 
the course of the proceeding or by inclusion in an initial decision of 
the Administrative Law Judge or an order or opinion of the Commission. 
It shall be the duty of parties to seek and Administrative Law Judges to 
grant such of the foregoing means of relief or other appropriate relief 
as may be sufficient to compensate for withheld testimony, documents, or 
other evidence. If in the Administrative Law Judge's opinion such relief 
would not be sufficient, or in instances where a nonparty fails to 
comply with a subpoena or order, he shall certify to the Commission a 
request that court enforcement of the subpoena or order be sought.

[43 FR 56867, Dec. 4, 1978, as amended at 50 FR 53305, Dec. 31, 1985; 61 
FR 50649, Sept. 26, 1996]



Sec. 3.38A  Withholding requested material.

    (a) Any person withholding material responsive to a subpoena issued 
pursuant to Sec. 3.34, written interrogatories requested pursuant to 
Sec. 3.35, a request for production or access pursuant to Sec. 3.37, 
or any other request for the production of materials under this part, 
shall assert a claim of privilege or any similar claim not later than 
the date set for production of the material. Such person shall, if so 
directed in the subpoena or other request for production, submit, 
together with such claim, a schedule of the items withheld which states 
individually as to each such item the type, title, specific subject 
matter, and date of the item; the names, addresses, positions, and 
organizations of all authors and recipients of the item; and the 
specific grounds for claiming that the item is privileged.
    (b) A person withholding material for reasons described in Sec. 
3.38A(a) shall comply with the requirements of that subsection in lieu 
of filing a motion to limit or quash compulsory process.

(Sec. 5, 38 Stat. 719 as amended (15 U.S.C. 45))

[44 FR 54043, Sept. 18, 1979, as amended at 61 FR 50650, Sept. 26, 1996]



Sec. 3.39  Orders requiring witnesses to testify or provide other 
information and granting immunity.

    (a) Where Commission complaint counsel desire the issuance of an 
order requiring a witness or deponent to testify or provide other 
information and granting immunity under title 18, section 6002, United 
States Code, Directors and Assistant Directors of Bureaus and Regional 
Directors and Assistant Regional Directors of Commission Regional 
Offices who supervise complaint counsel responsible for presenting 
evidence in support of the complaint are authorized to determine:
    (1) That the testimony or other information sought from a witness or 
deponent, or prospective witness or deponent, may be necessary to the 
public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his privilege 
against self-incrimination; and to request, through the Commission's 
liaison officer, approval by the Attorney General for the issuance of 
such order. Upon receipt of approval by the Attorney General (or his 
designee), the Administrative Law Judge is authorized to issue an order 
requiring the witness or deponent to testify or provide other 
information and granting immunity when the witness or deponent has 
invoked his privilege against self-incrimination and it cannot be 
determined that such privilege was improperly invoked.
    (b) Requests by counsel other than Commission complaint counsel for 
an order requiring a witness to testify or provide other information and 
granting immunity under title 18, section 6002, United States Code, may 
be made to the Administrative Law Judge and may be made ex parte. When 
such requests are made, the Administrative Law Judge is authorized to 
determine:

[[Page 67]]

    (1) That the testimony or other information sought from a witness or 
deponent, or prospective witness or deponent, may be necessary to the 
public interest, and
    (2) That such individual has refused or is likely to refuse to 
testify or provide such information on the basis of his privilege 
against self-incrimination; and, upon making such determinations, to 
request, through the Commission's liaison officer, approval by the 
Attorney General for the issuance of an order requiring a witness to 
testify or provide other information and granting immunity; and, after 
the Attorney General (or his designee) has granted such approval, to 
issue such order when the witness or deponent has invoked his privilege 
against self-incrimination and it cannot be determined that such 
privilege was improperly invoked.

(18 U.S.C. 6002, 6004)

[37 FR 5017, Mar. 9, 1972, as amended at 50 FR 53306, Dec. 31, 1985; 66 
FR 64143, Dec. 12, 2001]



Sec. 3.40  Admissibility of evidence in advertising substantiation 
cases.

    (a) If a person, partnership, or corporation is required through 
compulsory process under section 6, 9 or 20 of the Act issued after 
October 26, 1977 to submit to the Commission substantiation in support 
of an express or an implied representation contained in an 
advertisement, such person, partnership or corporation shall not 
thereafter be allowed, in any adjudicative proceeding in which it is 
alleged that the person, partnership, or corporation lacked a reasonable 
basis for the representation, and for any purpose relating to the 
defense of such allegation, to introduce into the record, whether 
directly or indirectly through references contained in documents or oral 
testimony, any material of any type whatsoever that was required to be 
but was not timely submitted in response to said compulsory process. 
Provided, however, that a person, partnership, or corporation is not, 
within the meaning of this section, required through compulsory process 
to submit substantiation with respect to those portions of said 
compulsory process to which such person, partnership, or corporation has 
raised good faith legal objections in a timely motion pursuant to the 
Commission's Rules of Practice and Procedure, until the Commission 
denies such motion; or if the person, partnership, or corporation 
thereafter continues to refuse to comply, until such process has been 
judicially enforced.
    (b) The Administrative Law Judge shall, upon motion, at any stage 
exclude all material that was required to be but was not timely 
submitted in response to compulsory process described in paragraph (a) 
of this section, or any reference to such material, unless the person, 
partnership, or corporation demonstrates in a hearing, and the 
Administrative Law Judge finds, that by the exercise of due diligence 
the material could not have been timely submitted in response to the 
compulsory process, and that the Commission was notified of the 
existence of the material immediately upon its discovery. Said findings 
of the Administrative Law Judge shall be in writing and shall specify 
with particularity the evidence relied upon. The rules normally 
governing the admissibility of evidence in Commission proceedings shall 
in any event apply to any material coming within the above exception.

[42 FR 56500, Oct. 10, 1977; 42 FR 61450, Dec. 5, 1977, as amended at 45 
FR 45578, July 7, 1980]



                           Subpart E_Hearings



Sec. 3.41  General rules.

    (a) Public hearings. All hearings in adjudicative proceedings shall 
be public unless an in camera order is entered by the Administrative Law 
Judge pursuant to Sec. 3.45(b) of this chapter or unless otherwise 
ordered by the Commission.
    (b) Expedition. Hearings shall proceed with all reasonable 
expedition, and, insofar as practicable, shall be held at one place and 
shall continue, except for brief intervals of the sort normally involved 
in judicial proceedings, without suspension until concluded. Consistent 
with the requirements of expedition:
    (1) The Administrative Law Judge may order hearings at more than one 
place and may grant a reasonable recess at the end of a case-in-chief 
for the purpose of discovery deferred during the pre-hearing procedure 
where the Administrative Law Judge determines

[[Page 68]]

that such recess will materially expedite the ultimate disposition of 
the proceeding.
    (2) When actions involving a common question of law or fact are 
pending before the Administrative Law Judge, the Administrative Law 
Judge may order a joint hearing of any or all the matters in issue in 
the actions; the Administrative Law Judge may order all the actions 
consolidated; and the Administrative Law Judge may make such orders 
concerning proceedings therein as may tend to avoid unnecessary costs or 
delay.
    (3) When separate hearings will be conducive to expedition and 
economy, the Administrative Law Judge may order a separate hearing of 
any claim, or of any separate issue, or of any number of claims or 
issues.
    (c) Rights of parties. Every party, except intervenors, whose rights 
are determined under Sec. 3.14, shall have the right of due notice, 
cross-examination, presentation of evidence, objection, motion, 
argument, and all other rights essential to a fair hearing.
    (d) Adverse witnesses. An adverse party, or an officer, agent, or 
employee thereof, and any witness who appears to be hostile, unwilling, 
or evasive, may be interrogated by leading questions and may also be 
contradicted and impeached by the party calling him.
    (e) Participation in adjudicative packaging and labeling hearings. 
At adjudicative hearings under the Fair Packaging and Labeling Act, any 
party or any interested person designated as a party pursuant to Sec. 
3.13, or his representative, may be sworn as a witness and heard.
    (f) Requests for an order requiring a witness to testify or provide 
other information and granting immunity under title 18, section 6002, of 
the United States Code, shall be disposed of in accordance with Sec. 
3.39.

(18 U.S.C. 6002, 6004)

[32 FR 8449, June 13, 1967, as amended at 37 FR 5017, Mar. 9, 1972; 37 
FR 5609, Mar. 17, 1972; 39 FR 34398, Sept. 25, 1974; 44 FR 62887, Nov. 
1, 1979]



Sec. 3.42  Presiding officials.

    (a) Who presides. Hearings in adjudicative proceedings shall be 
presided over by a duly qualified Administrative Law Judge or by the 
Commission or one or more members of the Commission sitting as 
Administrative Law Judges; and the term Administrative Law Judge as used 
in this part means and applies to the Commission or any of its members 
when so sitting.
    (b) How assigned. The presiding Administrative Law Judge shall be 
designated by the Chief Administrative Law Judge or, when the Commission 
or one or more of its members preside, by the Commission, who shall 
notify the parties of the Administrative Law Judge designated.
    (c) Powers and duties. Administrative Law Judges shall have the duty 
to conduct fair and impartial hearings, to take all necessary action to 
avoid delay in the disposition of proceedings, and to maintain order. 
They shall have all powers necessary to that end, including the 
following:
    (1) To administer oaths and affirmations;
    (2) To issue subpenas and orders requiring answers to questions;
    (3) To take depositions or to cause depositions to be taken;
    (4) To compel admissions, upon request of a party or on their own 
initiative;
    (5) To rule upon offers of proof and receive evidence;
    (6) To regulate the course of the hearings and the conduct of the 
parties and their counsel therein;
    (7) To hold conferences for settlement, simplification of the 
issues, or any other proper purpose;
    (8) To consider and rule upon, as justice may require, all 
procedural and other motions appropriate in an adjudicative proceeding, 
including motions to open defaults;
    (9) To make and file initial decisions;
    (10) To certify questions to the Commission for its determination;
    (11) To reject written submissions that fail to comply with rule 
requirements, or deny in camera status without prejudice until a party 
complies with all relevant rules; and
    (12) To take any action authorized by the rules in this part or in 
conformance with the provisions of the Administrative Procedure Act as 
restated and incorporated in title 5, U.S.C.
    (d) Suspension of attorneys by Administrative Law Judge. The 
Administrative

[[Page 69]]

Law Judge shall have the authority, for good cause stated on the record, 
to suspend or bar from participation in a particular proceeding any 
attorney who shall refuse to comply with his directions, or who shall be 
guilty of disorderly, dilatory, obstructionist, or contumacious conduct, 
or contemptuous language in the course of such proceeding. Any attorney 
so suspended or barred may appeal to the Commission in accordance with 
the provisions of Sec. 3.23(a). The appeal shall not operate to suspend 
the hearing unless otherwise ordered by the Administrative Law Judge or 
the Commission; in the event the hearing is not suspended, the attorney 
may continue to participate therein pending disposition of the appeal.
    (e) Substitution of Administrative Law Judge. In the event of the 
substitution of a new Administrative Law Judge for the one originally 
designated, any motion predicated upon such substitution shall be made 
within five (5) days thereafter.
    (f) Interference. In the performance of their adjudicative 
functions, Administrative Law Judges shall not be responsible to or 
subject to the supervision or direction of any officer, employee, or 
agent engaged in the performance of investigative or prosecuting 
functions for the Commission, and all direction by the Commission to 
Administrative Law Judges concerning any adjudicative proceedings shall 
appear in and be made a part of the record.
    (g) Disqualification of Administrative Law Judges. (1) When an 
Administrative Law Judge deems himself disqualified to preside in a 
particular proceeding, he shall withdraw therefrom by notice on the 
record and shall notify the Director of Administrative Law Judges of 
such withdrawal.
    (2) Whenever any party shall deem the Administrative Law Judge for 
any reason to be disqualified to preside, or to continue to preside, in 
a particular proceeding, such party may file with the Secretary a motion 
addressed to the Administrative Law Judge to disqualify and remove him, 
such motion to be supported by affidavits setting forth the alleged 
grounds for disqualification. If the Administrative Law Judge does not 
disqualify himself within ten (10) days, he shall certify the motion to 
the Commission, together with any statement he may wish to have 
considered by the Commission. The Commission shall promptly determine 
the validity of the grounds alleged, either directly or on the report of 
another Administrative Law Judge appointed to conduct a hearing for that 
purpose.
    (3) Such motion shall be filed at the earliest practicable time 
after the participant learns, or could reasonably have learned, of the 
alleged grounds for disqualification.
    (h) Failure to comply with Administrative Law Judge's directions. 
Any party who refuses or fails to comply with a lawfully issued order or 
direction of an Administrative Law Judge may be considered to be in 
contempt of the Commission. The circumstances of any such neglect, 
refusal, or failure, together with a recommendation for appropriate 
action, shall be promptly certified by the Administrative Law Judge to 
the Commission. The Commission may make such orders in regard thereto as 
the circumstances may warrant.

[32 FR 8449, June 13, 1967, as amended at 37 FR 5609, Mar. 17, 1972; 41 
FR 8340, Feb. 26, 1976; 43 FR 56868, Dec. 4, 1978; 46 FR 45750, Sept. 
15, 1981; 50 FR 53306, Dec. 31, 1985; 66 FR 17629, Apr. 3, 2001]



Sec. 3.43  Evidence.

    (a) Burden of proof. Counsel representing the Commission, or any 
person who has filed objections sufficient to warrant the holding of an 
adjudicative hearing pursuant to Sec. 3.13, shall have the burden of 
proof, but the proponent of any factual proposition shall be required to 
sustain the burden of proof with respect thereto.
    (b) Admissibility; exclusion of relevant evidence; mode and order of 
interrogation and presentation. (1) Relevant, material, and reliable 
evidence shall be admitted. Irrelevant, immaterial, and unreliable 
evidence shall be excluded. Evidence, even if relevant, may be excluded 
if its probative value is substantially outweighed by the danger of 
unfair prejudice, confusion of the issues, or if the evidence would be 
misleading, or by considerations of undue delay, waste of time, or 
needless presentation

[[Page 70]]

of cumulative evidence. The Administrative Law Judge shall exercise 
reasonable control over the mode and order of interrogating witnesses 
and presenting evidence so as to--
    (i) Make the interrogation and presentation effective for the 
ascertainment of the truth.
    (ii) Avoid needless consumption of time; and
    (iii) Protect witnesses from harassment or undue embarrassment.
    (2) As respondents are in the best position to determine the nature 
of documents generated by such respondents and which come from their own 
files, the burden of proof is on the respondent to introduce evidence to 
rebut a presumption that such documents are authentic and kept in the 
regular course of business. See Lenox, Inc., 73 F.T.C. 578, 603-04 
(1968).
    (c) Information obtained in investigations. Any documents, papers, 
books, physical exhibits, or other materials or information obtained by 
the Commission under any of its powers may be disclosed by counsel 
representing the Commission when necessary in connection with 
adjudicative proceedings and may be offered in evidence by counsel 
representing the Commission in any such proceeding.
    (d) Official notice. When any decision of an Administrative Law 
Judge or of the Commission rests, in whole or in part, upon the taking 
of official notice of a material fact not appearing in evidence of 
record, opportunity to disprove such noticed fact shall be granted any 
party making timely motion therefor.
    (e) Objections. Objections to evidence shall timely and briefly 
state the grounds relied upon, but the transcript shall not include 
argument or debate thereon except as ordered by the Administrative Law 
Judge. Rulings on all objections shall appear in the record.
    (f) Exceptions. Formal exception to an adverse ruling is not 
required.
    (g) Excluded evidence. When an objection to a question propounded to 
a witness is sustained, the questioner may make a specific offer of what 
he expects to prove by the answer of the witness, or the Administrative 
Law Judge may, in his discretion, receive and report the evidence in 
full. Rejected exhibits, adequately marked for identification, shall be 
retained in the record so as to be available for consideration by any 
reviewing authority.

[32 FR 8449, June 13, 1967; 32 FR 8711, June 17, 1967, as amended at 48 
FR 44766, Sept. 30, 1983; 61 FR 50650, Sept. 26, 1996; 66 FR 17629, Apr. 
3, 2001; 66 FR 20527, Apr. 23, 2001]



Sec. 3.44  Record.

    (a) Reporting and transcription. Hearings shall be stenographically 
reported and transcribed by the official reporter of the Commission 
under the supervision of the Administrative Law Judge, and the original 
transcript shall be a part of the record and the sole official 
transcript. Copies of transcripts are available from the reporter at 
rates not to exceed the maximum rates fixed by contract between the 
Commission and the reporter.
    (b) Corrections. Corrections of the official transcript may be made 
only when they involve errors affecting substance and then only in the 
manner herein provided. Corrections ordered by the Administrative Law 
Judge or agreed to in a written stipulation signed by all counsel and 
parties not represented by counsel, and approved by the Administrative 
Law Judge, shall be included in the record, and such stipulations, 
except to the extent they are capricious or without substance, shall be 
approved by the Administrative Law Judge. Corrections shall not be 
ordered by the Administrative Law Judge except upon notice and 
opportunity for the hearing of objections. Such corrections shall be 
made by the official reporter by furnishing substitute type pages, under 
the usual certificate of the reporter, for insertion in the official 
record. The original uncorrected pages shall be retained in the files of 
the Commission.
    (c) Closing of the hearing record. Immediately upon completion of 
the evidentiary hearing, the Administrative Law Judge shall issue an 
order closing the hearing record. The Administrative Law Judge shall 
retain the discretion to permit or order correction of the record as 
provided in Sec. 3.44(b).

[32 FR 8449, June 13, 1967, as amended at 61 FR 50650, Sept. 26, 1996; 
66 FR 17630, Apr. 3, 2001]

[[Page 71]]



Sec. 3.45  In camera orders.

    (a) Definition. Except as hereinafter provided, material made 
subject to an in camera order will be kept confidential and not placed 
on the public record of the proceeding in which it was submitted. Only 
respondents, their counsel, authorized Commission personnel, and court 
personnel concerned with judicial review may have access thereto, 
provided that the Administrative Law Judge, the Commission and reviewing 
courts may disclose such in camera material to the extent necessary for 
the proper disposition of the proceeding.
    (b) In camera treatment of material. A party or third party may 
obtain in camera treatment for material, or portions thereof, offered 
into evidence only by motion to the Administrative Law Judge. Parties 
who seek to use material obtained from a third party subject to 
confidentiality restrictions must demonstrate that the third party has 
been given at least ten (10) days notice of the proposed use of such 
material. Each such motion must include an attachment containing a copy 
of each page of the document in question on which in camera or otherwise 
confidential excerpts appear. The Administrative Law Judge may order 
that such material, whether admitted or rejected, be placed in camera 
only after finding that its public disclosure will likely result in a 
clearly defined, serious injury to the person, partnership or 
corporation requesting in camera treatment. This finding shall be based 
on the standard articulated in H.P. Hood & Sons, Inc., 58 F.T.C. 1184, 
1188 (1961); see also Bristol-Myers Co., 90 F.T.C. 455, 456 (1977), 
which established a three-part test that was modified by General Foods 
Corp., 95 F.T.C. 352, 355 (1980). The party submitting material for 
which in camera treatment is sought must provide, for each piece of such 
evidence and affixed to such evidence, the name and address of any 
person who should be notified in the event that the Commission intends 
to disclose in camera information in a final decision. No material, or 
portion thereof, offered into evidence, whether admitted or rejected, 
may be withheld from the public record unless it falls within the scope 
of an order issued in accordance with this section, stating the date on 
which in camera treatment will expire, and including:
    (1) A description of the material;
    (2) A statement of the reasons for granting in camera treatment; and
    (3) A statement of the reasons for the date on which in camera 
treatment will expire. Such expiration date may not be omitted except in 
unusual circumstances, in which event the order shall state with 
specificity the reasons why the need for confidentiality of the 
material, or portion thereof at issue is not likely to decrease over 
time, and any other reasons why such material is entitled to in camera 
treatment for an indeterminate period. If an in camera order is silent 
as to duration, without explanation, then it will expire three years 
after its date of issuance. Material subject to an in camera order shall 
be segregated from the public record and filed in a sealed envelope, or 
other appropriate container, bearing the title, the docket number of the 
proceeding, the notation ``In Camera Record under Sec. 3.45,'' and the 
date on which in camera treatment expires. If the Administrative Law 
Judge has determined that in camera treatment should be granted for an 
indeterminate period, the notation should state that fact.
    (c) Release of in camera material. In camera material constitutes 
part of the confidential records of the Commission and is subject to the 
provisions of Sec. 4.11 of this chapter.
    (d) Briefs and other submissions referring to in camera or 
confidential information. Parties shall not disclose information that 
has been granted in camera status pursuant to Sec. 3.45(b) or is 
subject to confidentiality protections pursuant to a protective order in 
the public version of proposed findings, briefs, or other documents. 
This provision does not preclude references in such proposed findings, 
briefs, or other documents to in camera or other confidential 
information or general statements based on the content of such 
information.
    (e) When in camera or confidential information is included in briefs 
and other submissions. If a party includes specific information that has 
been granted in camera status pursuant to Sec. 3.45(b) or is subject to 
confidentiality protections

[[Page 72]]

pursuant to a protective order in any document filed in a proceeding 
under this part, the party shall file two versions of the document. A 
complete version shall be marked ``In Camera'' or ``Subject to 
Protective Order,'' as appropriate, on the first page and shall be filed 
with the Secretary and served by the party on the other parties in 
accordance with the rules in this part. Submitters of in camera or other 
confidential material should mark any such material in the complete 
versions of their submissions in a conspicuous matter, such as with 
highlighting or bracketing. References to in camera or confidential 
material must be supported by record citations to relevant evidentiary 
materials and associated ALJ in camera or other confidentiality rulings 
to confirm that in camera or other confidential treatment is warranted 
for such material. In addition, the document must include an attachment 
containing a copy of each page of the document in question on which in 
camera or otherwise confidential excerpts appear, and providing the name 
and address of any person who should be notified of the Commission's 
intent to disclose in a final decision any of the in camera or otherwise 
confidential information in the document. Any time period within which 
these rules allow a party to respond to a document shall run from the 
date the party is served with the complete version of the document. An 
expurgated version of the document, marked ``Public Record'' on the 
first page and omitting the in camera and confidential information and 
attachment that appear in the complete version, shall be filed with the 
Secretary within five (5) days after the filing of the complete version, 
unless the Administrative Law Judge or the Commission directs otherwise, 
and shall be served by the party on the other parties in accordance with 
the rules in this part. The expurgated version shall indicate any 
omissions with brackets or ellipses, and its pagination and depiction of 
text on each page shall be identical to that of the in camera version.
    (f) When in camera or confidential information is included in 
rulings or recommendations of the Administrative Law Judge. If the 
Administrative Law Judge includes in any ruling or recommendation 
information that has been granted in camera status pursuant to Sec. 
3.45(b) or is subject to confidentiality protections pursuant to a 
protective order, the Administrative Law Judge shall file two versions 
of the ruling or recommendation. A complete version shall be marked ``In 
Camera'' or ``Subject to Protective Order,'' as appropriate, on the 
first page and shall be served upon the parties. The complete version 
will be placed in the in camera record of the proceeding. An expurgated 
version, to be filed within five (5) days after the filing of the 
complete version, shall omit the in camera and confidential information 
that appears in the complete version, shall be marked ``Public Record'' 
on the first page, shall be served upon the parties, and shall be 
included in the public record of the proceeding.
    (g) Provisional in camera rulings. The Administrative Law Judge may 
make a provisional grant of in camera status to materials if the showing 
required in Sec. 3.45(b) cannot be made at the time the material is 
offered into evidence but the Administrative Law Judge determines that 
the interests of justice would be served by such a ruling. Within twenty 
(20) days of such a provisional grant of in camera status, the party 
offering the evidence or an interested third party must present a motion 
to the Administrative Law Judge for a final ruling on whether in camera 
treatment of the material is appropriate pursuant to Sec. 3.45(b). If 
no such motion is filed, the Administrative Law Judge may either exclude 
the evidence, deny in camera status, or take such other action as is 
appropriate.

[66 FR 17630, Apr. 3, 2001; 66 FR 20527, Apr. 23, 2001]



Sec. 3.46  Proposed findings, conclusions, and order.

    (a) General. Upon the closing of the hearing record, or within a 
reasonable time thereafter fixed by the Administrative Law Judge, any 
party may file with the Secretary of the Commission for consideration of 
the Administrative Law Judge proposed findings of fact, conclusions of 
law, and rule or order, together with reasons therefor and

[[Page 73]]

briefs in support thereof. Such proposals shall be in writing, shall be 
served upon all parties, and shall contain adequate references to the 
record and authorities relied on. If a party includes in the proposals 
information that has been granted in camera status pursuant to Sec. 
3.45(b), the party shall file two versions of the proposals in 
accordance with the procedures set forth in Sec. 3.45(e).
    (b) Exhibit Index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall include an index listing 
for each exhibit offered by the party and received in evidence:
    (1) The exhibit number, followed by
    (2) The exhibit's title or a brief description if the exhibit is 
untitled;
    (3) The transcript page at which the Administrative Law Judge ruled 
on the exhibit's admissibility or a citation to any written order in 
which such ruling was made;
    (4) The transcript pages at which the exhibit is discussed;
    (5) An identification of any other exhibit which summarizes the 
contents of the listed exhibit, or of any other exhibit of which the 
listed exhibit is a summary;
    (6) A cross-reference, by exhibit number, to any other portions of 
that document admitted as a separate exhibit on motion by any other 
party; and
    (7) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (c) Witness Index. The first statement of proposed findings of fact 
and conclusions of law filed by a party shall also include an index to 
the witnesses called by that party, to include for each witness:
    (1) The name of the witness;
    (2) A brief identification of the witness;
    (3) The transcript pages at which any testimony of the witness 
appears; and
    (4) A statement whether the exhibit has been accorded in camera 
treatment, and a citation to the in camera ruling.
    (d) Stipulated indices. As an alternative to the filing of separate 
indices, the parties are encouraged to stipulate to joint exhibit and 
witness indices at the time the first statement of proposed findings of 
fact and conclusions of law is due to be filed.
    (e) Rulings. The record shall show the Administrative Law Judge's 
ruling on each proposed finding and conclusion, except when the order 
disposing of the proceeding otherwise informs the parties of the action 
taken.

[48 FR 56945, Dec. 27, 1983, as amended at 52 FR 22294, June 11, 1987; 
61 FR 50650, Sept. 26, 1996; 66 FR 17631, Apr. 3, 2001]



                           Subpart F_Decision



Sec. 3.51  Initial decision.

    (a) When filed and when effective. The Administrative Law Judge 
shall file an initial decision within ninety (90) days after closing the 
hearing record pursuant to Sec. 3.44(c), or within thirty (30) days 
after a default or the granting of a motion for summary decision or 
waiver by the parties of the filing of proposed findings of fact, 
conclusions of law and order, or within such further time as the 
Commission may by order allow upon written request from the 
Administrative Law Judge. In no event shall the initial decision be 
filed any later than one (1) year after the issuance of the 
administrative compliant, except that the Administrative Law Judge may, 
upon a finding of extraordinary circumstances, extend the one-year 
deadline for a period of up to sixty (60) days. Such extension, upon its 
expiration, may be continued for additional consecutive periods of up to 
sixty (60) days, provided that each additional period is based upon a 
finding by the Administrative Law Judge that extraordinary circumstances 
are still present. The pendency of any collateral federal court 
proceeding that relates to the administrative adjudication shall toll 
the one-year deadline for filing the initial decision. The ALJ may stay 
the administrative proceeding until resolution of the collateral federal 
court proceeding. Once issued, the initial decision shall become the 
decision of the Commission thirty (30) days after service thereof upon 
the parties or thirty (30) days after the filing of a timely notice of 
appeal, whichever shall be later, unless a party filing such a notice 
shall have perfected an appeal by the timely filing of an appeal brief 
or the Commission shall have issued an order placing

[[Page 74]]

the case on its own docket for review or staying the effective date of 
the decision.
    (b) Exhaustion of administrative remedies. An initial decision shall 
not be considered final agency action subject to judicial review under 5 
U.S.C. 704. Any objection to a ruling by the Administrative Law Judge, 
or to a finding, conclusion or a provision of the order in the initial 
decision, which is not made a part of an appeal to the Commission shall 
be deemed to have been waived.
    (c) Content. (1) An initial decision shall be based on a 
consideration of the whole record relevant to the issues decided, and 
shall be supported by reliable and probative evidence. The initial 
decision shall include a statement of findings (with specific page 
references to principal supporting items of evidence in the record) and 
conclusions, as well as the reasons or basis therefor, upon all the 
material issues of fact, law, or discretion presented on the record (or 
those designated under paragraph (c)(2) of this section) and an 
appropriate rule or order. Rulings containing information granted in 
camera status pursuant to Sec. 3.45 shall be filed in accordance with 
Sec. 3.45(f).
    (2) When more than one claim for relief is presented in an action, 
or when multiple parties are involved, the Administrative Law Judge may 
direct the entry of an initial decision as to one or more but fewer than 
all of the claims or parties only upon an express determination that 
there is no just reason for delay and upon an express direction for the 
entry of initial decision.
    (d) By whom made. The initial decision shall be made and filed by 
the Administrative Law Judge who presided over the hearings, except when 
he shall have become unavailable to the Commission.
    (e) Reopening of proceeding by Administrative Law Judge; termination 
of jurisdiction. (1) At any time prior to the filing of his initial 
decision, an Administrative Law Judge may reopen the proceeding for the 
reception of further evidence.
    (2) Except for the correction of clerical errors or pursuant to an 
order of remand from the Commission, the jurisdiction of the 
Administrative Law Judge is terminated upon the filing of his initial 
decision with respect to those issues decided pursuant to paragraph 
(c)(1) of this section.

[32 FR 8449, June 13, 1967, as amended at 35 FR 10656, July 1, 1970; 44 
FR 62887, Nov. 1, 1979; 48 FR 52576, Nov. 21, 1983; 48 FR 54810, Dec. 7, 
1983; 52 FR 22294, June 11, 1987; 61 FR 50650, Sept. 26, 1996; 66 FR 
17631, Apr. 3, 2001]



Sec. 3.52  Appeal from initial decision.

    (a) Who may file; notice of intention. Any party to a proceeding may 
appeal an initial decision to the Commission by filing a notice of 
appeal with the Secretary within ten (10) days after service of the 
initial decision. The notice shall specify the party or parties against 
whom the appeal is taken and shall designate the initial decision and 
order or part thereof appealed from. If a timely notice of appeal is 
filed by a party, any other party may thereafter file a notice of appeal 
within five (5) days after service of the first notice, or within ten 
(10) days after service of the initial decision, whichever period 
expires last.
    (b) Appeal brief. (1) The appeal shall be in the form of a brief, 
filed within thirty (30) days after service of the initial decision, and 
shall contain, in the order indicated, the following:
    (i) A subject index of the matter in the brief, with page 
references, and a table of cases (alphabetically arranged), textbooks, 
statutes, and other material cited, with page references thereto;
    (ii) A concise statement of the case, which includes a statement of 
facts relevant to the issues submitted for review, and a summary of the 
argument, which must contain a succinct, clear, and accurate statement 
of the arguments made in the body of the brief, and which must not 
merely repeat the argument headings;
    (iii) A specification of the questions intended to be urged;
    (iv) The argument presenting clearly the points of fact and law 
relied upon in support of the position taken on each question, with 
specific page references to the record and the legal or other material 
relied upon; and
    (v) A proposed form of order for the Commission's consideration 
instead of

[[Page 75]]

the order contained in the initial decision.
    (2) The brief shall not, without leave of the Commission, exceed 
18,750 words, including all footnotes and other substantive matter but 
excluding the cover, table of contents, table of authorities, 
glossaries, proposed form of order, appendices containing only sections 
of statutes or regulations, and any attachment required by Sec. 
3.45(e).
    (c) Answering brief. Within thirty (30) days after service of the 
appeal brief, the appellee may file an answering brief, which shall 
contain a subject index, with page references, and a table of cases 
(alphabetically arranged), textbooks, statutes, and other material 
cited, with page references thereto, as well as arguments in response to 
the appellant's appeal brief. However, if the appellee is also cross-
appealing, its answering brief shall also contain its arguments as to 
any issues the party is raising on cross-appeal, including the points of 
fact and law relied upon in support of its position on each question, 
with specific page references to the record and legal or other material 
on which the party relies in support of its cross-appeal, and a proposed 
form of order for the Commission's consideration instead of the order 
contained in the initial decision. If the appellee does not cross-
appeal, its answering brief shall not, without leave of the Commission, 
exceed 18,750 words. If the appellee cross-appeals, its brief in answer 
and on cross-appeal shall not, without leave of the Commission, exceed 
26,250 words. The word count limitations of this paragraph include all 
footnotes and other substantive matter but exclude the cover, table of 
contents, table of authorities, glossaries, proposed form of order, 
appendices containing only sections of statutes or regulations, and any 
attachment required by Sec. 3.45(e).
    (d) Reply brief. Within seven (7) days after service of the 
appellee's answering brief, the appellant may file a reply brief, which 
shall be limited to rebuttal of matters in the answering brief and shall 
not, without leave of the Commission, exceed 18,750 words. If the 
appellee has cross-appealed, any party who is the subject of the cross-
appeal may, within thirty (30) days after service of such appellee's 
brief, file a reply brief, which shall be limited to rebuttal of matters 
in the appellee's brief and shall not, without leave of the Commission, 
exceed 18,750 words. The appellee who has cross-appealed may, within 
seven (7) days after service of a reply to its cross-appeal, file an 
additional brief, which shall be limited to rebuttal of matters in the 
reply to its cross-appeal and shall not, without leave of the 
Commission, exceed 11,250 words. The word count limitations of this 
paragraph include all footnotes and other substantive matter but exclude 
the cover, table of contents, table of authorities, glossaries, proposed 
form of order, appendices containing only sections of statutes or 
regulations, and any attachment required by Sec. 3.45(e). No further 
briefs may be filed except by leave of the Commission.
    (e) In camera information. If a party includes in any brief to be 
filed under this section information that has been granted in camera 
status pursuant to Sec. 3.45(b) or is subject to confidentiality 
provisions pursuant to a protective order, the party shall file two 
versions of the brief in accordance with the procedures set forth in 
Sec. 3.45(e). The time period specified by this section within which a 
party may file an answering or reply brief will begin to run upon 
service on the party of the in camera or confidential version of a 
brief.
    (f) Signature. (1) The original of each brief filed shall have a 
hand-signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by a 
partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a brief constitutes a representation by the signer that 
he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; that it complies all the applicable word count 
limitation; and that to the best of his or her knowledge, information, 
and belief, it complies with all the other rules in this part. If a 
brief is not signed or is signed with intent to defeat the purpose of 
this section, it may be stricken as sham and false and the

[[Page 76]]

proceeding may go forward as though the brief has not been filed.
    (g) Designation of appellant and appellee in cases involving cross-
appeals. In a case involving an appeal by complaint counsel and one or 
more respondents, any respondent who has filed a timely notice of appeal 
and as to whom the Administrative Law Judge has issued an order to cease 
and desist shall be deemed an appellant for purposes of paragraphs (b), 
(c), and (d) of this section. In a case in which the Administrative Law 
Judge has dismissed the complaint as to all respondents, complaint 
counsel shall be deemed the appellant for purposes of paragraphs (b), 
(c), and (d) of this section.
    (h) Oral argument. All oral arguments shall be public unless 
otherwise ordered by the Commission. Oral arguments will be held in all 
cases on appeal to the Commission, unless the Commission otherwise 
orders upon its own initiative or upon request of any party made at the 
time of filing his brief. Oral arguments before the Commission shall be 
reported stenographically, unless otherwise ordered, and a member of the 
Commission absent from an oral argument may participate in the 
consideration and decision of the appeal in any case in which the oral 
argument is stenographically reported. The purpose of oral argument is 
to emphasize and clarify the written argument appearing in the briefs 
and to answer questions. Reading at length from the briefs or other 
texts is not favored.
    (i) Corrections in transcript of oral argument. The Commission will 
entertain only joint motions of the parties requesting corrections in 
the transcript of oral argument, except that the Commission will receive 
a unilateral motion which recites that the parties have made a good 
faith effort to stipulate to the desired corrections but have been 
unable to do so. If the parties agree in part and disagree in part, they 
should file a joint motion incorporating the extent of their agreement, 
and, if desired, separate motions requesting those corrections to which 
they have been unable to agree. The Secretary, pursuant to delegation of 
authority by the Commission, is authorized to prepare and issue in the 
name of the Commission a brief ``Order Correcting Transcript'' whenever 
a joint motion to correct transcript is received.
    (j) Briefs of amicus curiae. A brief of an amicus curiae may be 
filed by leave of the Commission granted on motion with notice to the 
parties or at the request of the Commission, except that such leave 
shall not be required when the brief is presented by an agency or 
officer of the United States; or by a State, territory, commonwealth, or 
the District of Columbia, or by an agency or officer of any of them. The 
brief may be conditionally filed with the motion for leave. A motion for 
leave shall identify the interest of the applicant and state how a 
Commission decision in the matter would affect the applicant or persons 
it represents. The motion shall also state the reasons why a brief of an 
amicus curiae is desirable. Except as otherwise permitted by the 
Commission, an amicus curiae shall file its brief within the time 
allowed the parties whose position as to affirmance or reversal the 
amicus brief will support. The Commission shall grant leave for a later 
filing only for cause shown, in which event it shall specify within what 
period such brief must be filed. A motion for an amicus curiae to 
participate in oral argument will be granted only for extraordinary 
reasons.
    (k) Extension of word count limitation. Extensions of word count 
limitation are disfavored, and will only be granted where a party can 
make a strong showing that undue prejudice would result from complying 
with the existing limit.

[66 FR 17631, Apr. 3, 2001; 66 FR 20527, Apr. 23, 2001]



Sec. 3.53  Review of initial decision in absence of appeal.

    An order by the Commission placing a case on its own docket for 
review will set forth the scope of such review and the issues which will 
be considered and will make provision for the filing of briefs if deemed 
appropriate by the Commission.



Sec. 3.54  Decision on appeal or review.

    (a) Upon appeal from or review of an initial decision, the 
Commission will consider such parts of the record as are cited or as may 
be necessary to resolve

[[Page 77]]

the issues presented and, in addition, will, to the extent necessary or 
desirable, exercise all the powers which it could have exercised if it 
had made the initial decision.
    (b) In rendering its decision, the Commission will adopt, modify, or 
set aside the findings, conclusions, and rule or order contained in the 
initial decision, and will include in the decision a statement of the 
reasons or basis for its action and any concurring and dissenting 
opinions.
    (c) In those cases where the Commission believes that it should have 
further information or additional views of the parties as to the form 
and content of the rule or order to be issued, the Commission, in its 
discretion, may withhold final action pending the receipt of such 
additional information or views.
    (d) The order of the Commission disposing of adjudicative hearings 
under the Fair Packaging and Labeling Act will be published in the 
Federal Register and, if it contains a rule or regulation, will specify 
the effective date thereof, which will not be prior to the ninetieth 
(90th) day after its publication unless the Commission finds that 
emergency conditions exist necessitating an earlier effective date, in 
which event the Commission will specify in the order its findings as to 
such conditions.



Sec. 3.55  Reconsideration.

    Within fourteen (14) days after completion of service of a 
Commission decision, any party may file with the Commission a petition 
for reconsideration of such decision, setting forth the relief desired 
and the grounds in support thereof. Any petition filed under this 
subsection must be confined to new questions raised by the decision or 
final order and upon which the petitioner had no opportunity to argue 
before the Commission. Any party desiring to oppose such a petition 
shall file an answer thereto within ten (10) days after service upon him 
of the petition. The filing of a petition for reconsideration shall not 
operate to stay the effective date of the decision or order or to toll 
the running of any statutory time period affecting such decision or 
order unless specifically so ordered by the Commission.

[32 FR 8449, June 13, 1967, as amended at 61 FR 50650, Sept. 26, 1996]



Sec. 3.56  Effective date of orders; application for stay.

    (a) Other than consent orders, an order to cease and desist under 
section 5 of the FTC Act becomes effective upon the sixtieth day after 
service, except as provided in section 5(g)(3) of the FTC Act, and 
except for divestiture provisions, as provided in section 5(g)(4) of the 
FTC Act.
    (b) Any party subject to a cease and desist order under section 5 of 
the FTC Act, other than a consent order, may apply to the Commission for 
a stay of all or part of that order pending judicial review. If, within 
30 days after the application was received by the Commission, the 
Commission either has denied or has not acted on the application, a stay 
may be sought in a court of appeals where a petition for review of the 
order is pending.
    (c) An application for stay shall state the reasons a stay is 
warranted and the facts relied upon, and shall include supporting 
affidavits or other sworn statements, and a copy of the relevant 
portions of the record. The application shall address the likelihood of 
the applicant's success on appeal, whether the applicant will suffer 
irreparable harm if a stay is not granted, the degree of injury to other 
parties if a stay is granted, and why the stay is in the public 
interest.
    (d) An application for stay shall be filed within 30 days of service 
of the order on the party. Such application shall be served in 
accordance with the provisions of Sec. 4.4(b) of this part that are 
applicable to service in adjudicative proceedings. Any party opposing 
the application may file an answer within 5 business days after receipt 
of the application. The applicant may file a reply brief, limited to new 
matters raised by the answer, within 3 business days after receipt of 
the answer.

[60 FR 37748, July 21, 1995]

Subpart G [Reserved]

[[Page 78]]



                   Subpart H_Reopening of Proceedings



Sec. 3.71  Authority.

    Except while pending in a U.S. court of appeals on a petition for 
review (after the transcript of the record has been filed) or in the 
U.S. Supreme Court, a proceeding may be reopened by the Commission at 
any time in accordance with Sec. 3.72. Any person subject to a 
Commission decision containing a rule or order which has become 
effective, or an order to cease and desist which has become final may 
file a request to reopen the proceeding in accordance with Sec. 2.51.

[44 FR 40637, July 12, 1979]



Sec. 3.72  Reopening.

    (a) Before statutory review. At any time prior to the expiration of 
the time allowed for filing a petition for review or prior to the filing 
of the transcript of the record of a proceeding in a U.S. court of 
appeals pursuant to a petition for review, the Commission may upon its 
own initiative and without prior notice to the parties reopen the 
proceeding and enter a new decision modifying or setting aside the whole 
or any part of the findings as to the facts, conclusions, rule, order, 
or opinion issued by the Commission in such proceeding.
    (b) After decision has become final. (1) Whenever the Commission is 
of the opinion that changed conditions of fact or law or the public 
interest may require that a Commission decision containing a rule or 
order which has become effective, or an order to cease and desist which 
has become final by reason of court affirmance or expiration of the 
statutory period for court review without a petition for review having 
been filed, or a Commission decision containing an order dismissing a 
proceeding, should be altered, modified, or set aside in whole or in 
part, the Commission will, except as provided in Sec. 2.51, serve upon 
each person subject to such decision (in the case of proceedings 
instituted under Sec. 3.13, such service may be by publication in the 
Federal Register) an order to show cause, stating the changes it 
proposes to make in the decision and the reasons they are deemed 
necessary. Within thirty (30) days after service of such order to show 
cause, any person served may file an answer thereto. Any person not 
responding to the order within the time allowed may be deemed to have 
consented to the proposed changes.
    (2) Whenever an order to show cause is not opposed, or if opposed 
but the pleadings do not raise issues of fact to be resolved, the 
Commission, in its discretion, may decide the matter on the order to 
show cause and answer thereto, if any, or it may serve upon the parties 
(in the case of proceedings instituted under Sec. 3.13, such service 
may be by publication in Federal Register) a notice of hearing, setting 
forth the date when the cause will be heard. In such a case, the hearing 
will be limited to the filing of briefs and may include oral argument 
when deemed necessary by the Commission. When the pleadings raise 
substantial factual issues, the Commission will direct such hearings as 
it deems appropriate, including hearings for the receipt of evidence by 
it or by an Administrative Law Judge. Unless otherwise ordered and 
insofar as practicable, hearings before an Administrative Law Judge to 
receive evidence shall be conducted in accordance with subparts B, C, D, 
and E of part 3 of this chapter. Upon conclusion of hearings before an 
Administrative Law Judge, the record and the Administrative Law Judge's 
recommendations shall be certified to the Commission for final 
disposition of the matter.
    (3) Termination of existing orders--(i) Generally. Notwithstanding 
the foregoing provisions of this rule, and except as provided in 
paragraphs (b)(3) (ii) and (iii) of this section, an order issued by the 
Commission before August 16, 1995, will be deemed, without further 
notice or proceedings, to terminate 20 years from the date on which the 
order was first issued, or on January 2, 1996, whichever is later.
    (ii) Exception. This paragraph applies to the termination of an 
order issued before August 16, 1995, where a complaint alleging a 
violation of the order was or is filed (with or without an accompanying 
consent decree) in federal court by the United States or the Federal 
Trade Commission while the order

[[Page 79]]

remains in force, either on or after August 16, 1995, or within the 20 
years preceding that date. If more than one complaint was or is filed 
while the order remains in force, the relevant complaint for purposes of 
this paragraph will be the latest filed complaint. An order subject to 
this paragraph will terminate 20 years from the date on which a court 
complaint described in this paragraph was or is filed, except as 
provided in the following sentence. If the complaint was or is 
dismissed, or a federal court rules or has ruled that the respondent did 
not violate any provision of the order, and the dismissal or ruling was 
or is not appealed, or was or is upheld on appeal, the order will 
terminate according to paragraph (b)(3)(i) of this section as though the 
complaint was never filed; provided, however, that the order will not 
terminate between the date that such complaint is filed and the later of 
the deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal. The filing of a complaint 
described in this paragraph will not affect the duration of any order 
provision that has expired, or will expire, by its own terms. The filing 
of a complaint described in this paragraph also will not affect the 
duration of an order's application to any respondent that is not named 
in the complaint.
    (iii) Stay of Termination. Any party to an order may seek to stay, 
in whole or part, the termination of the order as to that party pursuant 
to paragraph (b)(3) (i) or (ii) of this section. Petitions for such 
stays shall be filed in accordance with the procedures set forth in 
Sec. 2.51 of these rules. Such petitions shall be filed on or before 
the date on which the order would be terminated pursuant to paragraph 
(b)(3) (i) or (ii) of this section. Pending the disposition of such a 
petition, the order will be deemed to remain in effect without 
interruption.
    (iv) Orders not terminated. Nothing in Sec. 3.72(b)(3) is intended 
to apply to in camera orders or other procedural or interlocutory 
rulings by an Administrative Law Judge or the Commission.

[32 FR 8449, June 13, 1967, as amended at 44 FR 40637, July 12, 1979; 45 
FR 21623, Apr. 2, 1980; 60 FR 58515, Nov. 28, 1995]



 Subpart I_Recovery of Awards Under the Equal Access to Justice Act in 
                         Commission Proceedings

    Authority: 5 U.S.C. 504 and 5 U.S.C. 553(b).

    Source: 63 FR 36341, July 6, 1998, unless otherwise noted.



Sec. 3.81  General provisions.

    (a) Purpose of these rules. The Equal Access to Justice Act, 5 
U.S.C. 504 (called ``the Act'' in this subpart), provides for the award 
of attorney fees and other expenses to eligible individuals and entities 
who are parties to adversary adjudicative proceedings under part 3 of 
this title. The rules in this subpart describe the parties eligible for 
awards, how to apply for awards, and the procedures and standards that 
the Commission will use to make them.
    (1) When an eligible party will receive an award. An eligible party 
will receive an award when:
    (i) It prevails in the adjudicative proceeding, unless the 
Commission's position in the proceeding was substantially justified or 
special circumstances make an award unjust. Whether or not the position 
of the agency was substantially justified will be determined on the 
basis of the administrative record as a whole that is made in the 
adversary proceeding for which fees and other expenses are sought; or
    (ii) The agency's demand is substantially in excess of the decision 
of the adjudicative officer, and is unreasonable when compared with that 
decision, under all the facts and circumstances of the case. Demand 
means the express final demand made by the agency prior to initiation of 
the adversary adjudication, but does not include a recitation by the 
agency of the statutory penalty in the administrative complaint or 
elsewhere when accompanied by an express demand for a lesser amount.
    (b) When the Act applies. (1) Section 504(a)(1) of the Act applies 
to any adversarial adjudicative proceeding pending before the Commission 
at any time after October 1, 1981. This includes proceedings begun 
before October 1, 1981, if final Commission action has not been taken 
before that date.

[[Page 80]]

    (2) Section 504(a)(4) applies to any adversarial adjudicative 
proceeding pending before the Commission at any time on or after March 
29, 1996.
    (c) Proceedings covered. (1) The Act applies to all adjudicative 
proceedings under part 3 of the rules of practice as defined in Sec. 
3.2, except hearings relating to the promulgation, amendment, or repeal 
of rules under the Fair Packaging and Labeling Act.
    (2) [Reserved]
    (d) Eligibility of applicants. (1) To be eligible for an award of 
attorney fees and other expenses under the Act, the applicant must be a 
party to the adjudicative proceeding in which it seeks an award. The 
term party is defined in 5 U.S.C. 551(3). The applicant must show that 
it meets all conditions of eligibility set out in this subpart.
    (2) The types of eligible applicants are as follows:
    (i) An individual with a net worth of not more than $2 million;
    (ii) the sole owner of an unincorporated business who has a net 
worth of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (iii) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (iv) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (v) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees; and
    (vi) For purposes of receiving an award for fees and expenses for 
defending against an excessive Commission demand, any small entity, as 
that term is defined under 5 U.S.C. 601.
    (3) Eligibility of a party shall be determined as of the date the 
proceeding was initiated.
    (4) An applicant who owns an unincorporated business will be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' if the issues on which the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (5) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (6) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the Administrative Law Judge determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
Administrative Law Judge may determine that financial relationships of 
the applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (7) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.
    (e) Standards for awards--(1) For a prevailing party:
    (i) A prevailing applicant will receive an award for fees and 
expenses incurred after initiation of the adversary adjudication in 
connection with the entire adversary adjudication, or on a substantive 
portion of the adversary adjudication that is sufficiently significant 
and discrete to merit treatment as a separate unit unless the position 
of the agency was substantially justified. The burden of proof that an 
award should not be made to an eligible prevailing applicant is on 
complaint counsel, which may avoid an award by showing that its position 
had a reasonable basis in law and fact.
    (ii) An award to prevailing party will be reduced or denied if the 
applicant has unduly or unreasonably protracted

[[Page 81]]

the proceeding or if special circumstances make an award unjust.
    (2) For a party defending against an excessive demand:
    (i) An eligible applicant will receive an award for fees and 
expenses incurred after initiation of the adversary adjudication related 
to defending against the excessive portion of a Commission demand that 
is substantially in excess of the decision of the adjudicative officer 
and is unreasonable when compared with that decision under all the facts 
and circumstances of the case.
    (ii) An award will be denied if the applicant has committed a 
willful violation of law or otherwise acted in bad faith or if special 
circumstances make an award unjust.
    (f) Allowable fees and expenses. (1) Awards will be based on rates 
customarily charged by persons engaged in the business of acting as 
attorneys, agents and expert witnesses, even if the services were made 
available without charge or at a reduced rate to the applicant.
    (2) No award for the fee of an attorney or agent under these rules 
may exceed the hourly rate specified in 5 U.S.C. 504(b)(1)(A). No award 
to compensate an expert witness may exceed the highest rate at which the 
Commission paid expert witnesses for similar services at the time the 
fees were incurred. The appropriate rate may be obtained from the Office 
of the Executive Director. However, an award may also include the 
reasonable expenses of the attorney, agent, or witness as a separate 
item, if the attorney, agent or witness ordinarily charges clients 
separately for such expenses.
    (3) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the Administrative Law Judge shall 
consider the following:
    (i) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (ii) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (iii) The time actually spent in the representation of the 
applicant;
    (iv) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (v) Such other factors as may bear on the value of the services 
provided.
    (4) The reasonable cost of any study, analysis, engineering report, 
test, project or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.
    (5) Any award of fees or expenses under the Act is limited to fees 
and expenses incurred after initiation of the adversary adjudication 
and, with respect to excessive demands, the fees and expenses incurred 
in defending against the excessive portion of the demand.
    (g) Rulemaking on maximum rates for attorney fees. If warranted by 
an increase in the cost of living or by special circumstances (such as 
limited availability of attorneys qualified to handle certain types of 
proceedings), the Commission may, upon its own initiative or on petition 
of any interested person or group, adopt regulations providing that 
attorney fees may be awarded at a rate higher than the rate specified in 
5 U.S.C. 504(b)(1)(A) per hour in some or all the types of proceedings 
covered by this part. Rulemaking under this provision will be in 
accordance with Rules of Practice part 1, subpart C of this chapter.



Sec. 3.82  Information required from applicants.

    (a) Contents of application. An application for an award of fees and 
expenses under the Act shall contain the following:
    (1) Identity of the applicant and the proceeding for which the award 
is sought;
    (2) A showing that the applicant has prevailed; or, if the applicant 
has not prevailed, a showing that the Commission's demand was the final 
demand before initiation of the adversary adjudication and that it was 
substantially in excess of the decision of the adjudicative officer and 
was unreasonable when compared with that decision;

[[Page 82]]

    (3) Identification of the Commission position(s) that applicant 
alleges was (were) not substantially justified; or, identification of 
the Commission's demand that is alleged to be excessive and unreasonable 
and an explanation as to why the demand was excessive and unreasonable;
    (4) A brief description of the type and purpose of the organization 
or business (unless the applicant is an individual);
    (5) A statement of how the applicant meets the criteria of Sec. 
3.81(d);
    (6) The amount of fees and expenses incurred after the initiation of 
the adjudicative proceeding or, in the case of a claim for defending 
against an excessive demand, the amount of fees and expenses incurred 
after the initiation of the adjudicative proceeding attributable to the 
excessive portion of the demand;
    (7) Any other matters the applicant wishes the Commission to 
consider in determining whether and in what amount an award should be 
made; and
    (8) A written verification under oath or under penalty or perjury 
that the information provided is true and correct accompanied by the 
signature of the applicant or an authorized officer or attorney.
    (b) Net worth exhibit. (1) Each applicant except a qualified tax-
exempt organization or cooperative association must provide with its 
application a detailed exhibit showing the net worth of the application 
and any affiliates (as defined in Sec. 3.81(d)(6)) when the proceeding 
was initiated. The exhibit may be in any form convenient to the 
applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities and is sufficient to determine 
whether the applicant qualifies under the standards in this part. The 
Administrative Law Judge may require an applicant to file additional 
information to determine its eligibility for an award.
    (2) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, if an applicant objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure, the 
applicant may submit that portion of the exhibit directly to the 
Administrative Law Judge in a sealed envelope labeled ``Confidential 
Financial Information,'' accompanied by a motion to withhold the 
information from public disclosure. The motion shall describe the 
information sought to be withheld and explain, in detail, why it falls 
within one or more of the specific exemptions from mandatory disclosure 
under the Freedom of Information Act, 5 U.S.C. 552(b) (1) through (9), 
why public disclosure of the information would adversely affect the 
applicant, and why disclosure is not required in the public interest. 
The material in question shall be served on complaint counsel but need 
not be served on any other party to the proceeding. If the 
Administrative Law Judge finds that the information should not be 
withheld from disclosure, it shall be placed in the public record of the 
proceeding. Otherwise, any request to inspect or copy the exhibit shall 
be disposed of in accordance with Sec. 4.11.
    (c) Documentation of fees and expenses. The application shall be 
accompanied by full documentation of the fees and expenses incurred 
after initiation of the adversary adjudication, including the cost of 
any study, analysis, engineering report, test, project or similar 
matter, for which an award is sought. With respect to a claim for fees 
and expenses involving an excessive demand, the application shall be 
accompanied by full documentation of the fees and expenses incurred 
after initiation of the adversary adjudication, including the cost of 
any study, analysis, engineering report, test, project or similar 
matter, for which an award is sought attributable to the portion of the 
demand alleged to be excessive and unreasonable. A separate itemized 
statement shall be submitted for each professional firm or individual 
whose services are covered by the application, showing the hours spent 
in connection with the proceeding by each individual, a description of 
the specific services performed, the rate at which each fee has been 
computed, any expenses for which reimbursement is sought, the total 
amount claimed, and the total amount paid or payable by the applicant or 
by any other person or entity

[[Page 83]]

for the services provided. The Administrative Law Judge may require the 
applicant to provide vouchers, receipts, or other substantiation for any 
expenses claimed.
    (d) When an application may be filed--(1) For a prevailing party:
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results in 
final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.
    (2) For a party defending against an excessive demand:
    (i) An application may be filed not later than 30 days after the 
Commission has issued an order or otherwise taken action that results in 
final disposition of the proceeding.
    (ii) If review or reconsideration is sought or taken of a decision 
as to which an applicant believes the agency's demand was excessive and 
unreasonable, proceedings for the award of fees and expenses shall be 
stayed pending final disposition of the underlying controversy.
    (3) For purposes of this subpart, final disposition means the later 
of--
    (i) The date that the initial decision of the Administrative Law 
Judge becomes the decision of the Commission pursuant to Sec. 3.51(a);
    (ii) The date that the Commission issues an order disposing of any 
petitions for reconsideration of the Commission's final order in the 
proceeding; or
    (iii) The date that the Commission issues a final order or any other 
final resolution of a proceeding, such as a consent agreement, 
settlement or voluntary dismissal, which is not subject to a petition 
for reconsideration.



Sec. 3.83  Procedures for considering applicants.

    (a) Filing and service of documents. Any application for an award or 
other pleading or document related to an application shall be filed and 
served on all parties as specified in Sec. Sec. 4.2 and 4.4(b) of this 
chapter, except as provided in Sec. 3.82(b)(2) for confidential 
financial information. The date the Office of the Secretary of the 
Commission receives the application is deemed the date of filing.
    (b) Answer to application. (1) Within 30 days after service of an 
application, complaint counsel may file an answer to the application. 
Unless complaint counsel requests an extension of time for filing or 
files a statement of intent to negotiate under paragraph (b)(2) of this 
section, failure to file an answer within the 30-day period may be 
treated as a consent to the award requested.
    (2) If complaint counsel and the applicant believe that the issues 
in the fee application can be settled, they may jointly file a statement 
of their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted by the Administrative Law Judge 
upon request by complaint counsel and the applicant.
    (3) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of complaint 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, complaint counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under paragraph (f) of this section.
    (c) Reply. Within 15 days after service of an answer, the applicant 
may file a reply. If the reply is based on any alleged facts not already 
in the record of the proceeding, the applicant shall include with the 
reply either supporting affidavits or a request for further proceedings 
under paragraph (f) of this section.
    (d) Comments by other parties. Any party to a proceeding other than 
the applicant and complaint counsel may file comments on an application 
within 30 days after it is served or on an answer within 15 days after 
it is served. A commenting party may not participate further in 
proceedings on the application unless the Administrative Law Judge 
determines that the public interest requires such participation in order 
to permit full exploration of matters in the comments.

[[Page 84]]

    (e) Settlement. The applicant and complaint counsel may agree on a 
proposed settlement of the award before final action on the application. 
A proposed award settlement entered into in connection with a consent 
agreement covering the underlying proceeding will be considered in 
accordance with Sec. 3.25. The Commission may request findings of fact 
or recommendations on the award settlement from the Administrative Law 
Judge. A proposed award settlement entered into after the underlying 
proceeding has been concluded will be considered and may be approved or 
disapproved by the Administrative Law Judge subject to Commission review 
under paragraph (h) of this section. If an applicant and complaint 
counsel agree on a proposed settlement of an award before an application 
has been filed, the application shall be filed with the proposed 
settlement.
    (f) Further proceedings. (1) Ordinarily, the determination of an 
award will be made on the basis of the written record. However, on 
request of either the applicant or complaint counsel, or on his or her 
own initiative, the Administrative Law Judge may order further 
proceedings, such as an informal conference, oral argument, additional 
written submissions or an evidentiary hearing. Such further proceedings 
shall be held only when necessary for full and fair resolution of the 
issues arising from the application, and shall be conducted as promptly 
as possible.
    (2) A request that the Administrative Law Judge order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.
    (g) Decision. The Administrative Law Judge shall issue an initial 
decision on the application within 30 days after closing proceedings on 
the application.
    (1) For a decision involving a prevailing party: The decision shall 
include written findings and conclusions on the applicant's eligibility 
and status as a prevailing party, and an explanation of the reasons for 
any difference between the amount requested and the amount awarded. The 
decision shall also include, if at issue, findings on whether the 
agency's position was substantially justified, whether the applicant 
unduly protracted the proceedings, or whether special circumstances make 
an award unjust.
    (2) For a decision involving an excessive agency demand: The 
decision shall include written findings and conclusions on the 
applicant's eligibility and an explanation of the reasons why the 
agency's demand was or was not determined to be substantially in excess 
of the decision of the adjudicative officer and was or was not 
unreasonable when compared with that decision. That decision shall be 
based upon all the facts and circumstances of the case. The decision 
shall also include, if at issue, findings on whether the applicant has 
committed a willful violation of law or otherwise acted in bad faith, or 
whether special circumstances make an award unjust.
    (h) Agency review. Either the applicant or complaint counsel may 
seek review of the initial decision on the fee application by filing a 
notice of appeal under Sec. 3.52(a), or the Commission may decide to 
review the decision on its own initiative, in accordance with Sec. 
3.53. If neither the applicant nor complaint counsel seeks review and 
the Commission does not take review on its own initiative, the initial 
decision on the application shall become a final decision of the 
Commission 30 days after it is issued. Whether to review a decision is a 
matter within the discretion of the Commission. If review is taken, the 
Commission will issue a final decision on the application or remand the 
application to the Administrative Law Judge for further proceedings.
    (i) Judicial review. Judicial review of final Commission decisions 
on awards may be sought as provided in 5 U.S.C. 503(c)(2).
    (j) Payment of award. An applicant seeking payment of an award shall 
submit to the Secretary of the Commission a copy of the Commission's 
final decision granting the award, accompanied by a statement that the 
applicant will not seek review of the decision in the United States 
courts. The agency will pay the amount awarded to the applicant within 
60 days, unless judicial review of the award or of the underlying 
decision of the adjudicative

[[Page 85]]

proceeding has been sought by the applicant or any party to the 
proceeding.



PART 4_MISCELLANEOUS RULES--Table of Contents




Sec.
4.1 Appearances.
4.2 Requirements as to form, and filing of documents other than 
          correspondence.
4.3 Time.
4.4 Service.
4.5 Fees.
4.6 Cooperation with other agencies.
4.7 Ex parte communications.
4.8 Costs for obtaining Commission records.
4.9 The public record.
4.10 Nonpublic material.
4.11 Disclosure requests.
4.12 Disposition of documents submitted to the Commission.
4.13 Privacy Act rules.
4.14 Conduct of business.
4.15 Commission meetings.
4.16 Privilege against self-incrimination.
4.17 Disqualification of Commissioners.

    Authority: 15 U.S.C. 46, unless otherwise noted.



Sec. 4.1  Appearances.

    (a) Qualifications--(1) Attorneys. (i) U.S.-admitted. Members of the 
bar of a Federal court or of the highest court of any State or Territory 
of the United States are eligible to practice before the Commission.
    (ii) European Community (EC)-qualified. Persons who are qualified to 
practice law in a Member State of the European Community and authorized 
to practice before The Commission of the European Communities in 
accordance with Regulation No. 99/63/EEC are eligible to practice before 
the Commission.
    (iii) Any attorney desiring to appear before the Commission or an 
Administrative Law Judge may be required to show to the satisfaction of 
the Commission or the Administrative Law Judge his or her acceptability 
to act in that capacity.
    (2) Others. (i) Any individual or member of a partnership involved 
in any proceeding or investigation may appear on behalf or himself or of 
such partnership upon adequate identification. A corporation or 
association may be represented by a bona fide officer thereof upon a 
showing of adequate authorization.
    (ii) At the request of counsel representing any party in an 
adjudicative proceeding, the Administrative Law Judge may permit an 
expert in the same discipline as an expert witness to conduct all or a 
portion of the cross-examination of such witness.
    (b) Restrictions as to former members and employees--(1) General 
Prohibition. Except as provided in this section, or otherwise 
specifically authorized by the Commission, no former member or employee 
(``former employee'' or ``employee'') of the Commission may communicate 
to or appear before the Commission, as attorney or counsel, or otherwise 
assist or advise behind-the-scenes, regarding a formal or informal 
proceeding or investigation \1\ (except that a former employee who is 
disqualified solely under paragraph (b)(1)(ii) or paragraph (b)(1)(iv) 
of this section, is not prohibited from assisting or advising behind-
the-scenes) if:
---------------------------------------------------------------------------

    \1\ It is important to note that a new ``proceeding or 
investigation'' may be considered the same matter as a seemingly 
separate ``proceeding or investigation'' that was pending during the 
former employee's tenure. This is because a ``proceeding or 
investigation'' may continue in another form or in part. In determining 
whether two matters are actually the same, the Commission will consider: 
the extent to which the matters involve the same or related facts, 
issues, confidential information and parties; the time elapsed; and the 
continuing existence of an important Federal interest. See 5 CFR 
2637.201(c)(4). For example, where a former employee intends to 
participate in an investigation of compliance with a Commission order, 
submission of a request to reopen an order, or a proceeding with respect 
to reopening an order, the matter will be considered the same as the 
adjudicative proceeding or investigation that resulted in the order. A 
former employee who is uncertain whether the matter in which he seeks 
clearance to participate is wholly separate from any matter that was 
pending during his tenure should seek advice from the General Counsel or 
the General Counsel's designee before participating.
---------------------------------------------------------------------------

    (i) The former employee participated personally and substantially on 
behalf of the Commission in the same proceeding or investigation in 
which the employee now intends to participate;
    (ii) The participation would begin within two years after the 
termination of the former employee's service and, within a period of one 
year prior to the

[[Page 86]]

employee's termination, the proceeding or investigation was pending 
under the employee's official responsibility;
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to, or would be likely to have come to, the former 
employee's attention in the course of the employee's duties, (unless 
Commission staff determines that the nature of the documents or 
information is such that no present advantage could thereby be derived); 
or
    (iv) The former employee's participation would begin within one year 
after the employee's termination and, at the time of termination, the 
employee was a member of the Commission or a ``senior employee'' as 
defined in 18 U.S.C. 207(c).
    (2) Clearance Request Required. Any former employee, before 
participating in a Commission proceeding or investigation (see footnote 
1), whether through an appearance before a Commission official or 
behind-the-scenes assistance, shall file with the Secretary a request 
for clearance to participate, containing the information listed in Sec. 
4.1(b)(4) if:
    (i) The proceeding or investigation was pending in the Commission 
while the former employee served;
    (ii) A proceeding or investigation from which such proceeding or 
investigation directly resulted was pending during the former employee's 
service; or
    (iii) Nonpublic documents or information pertaining to the 
proceeding or investigation in question, and of the kind delineated in 
Sec. 4.10(a), came to or would likely have come to the former 
employee's attention in the course of the employee's duties, and the 
employee left the Commission within the previous three years.

    Note: This requirement applies even to a proceeding or investigation 
that had not yet been initiated formally when the former employee 
terminated employment, if the employee had learned nonpublic information 
relating to the subsequently initiated proceeding or investigation.

    (3) Exceptions. (i) Paragraphs (b) (1) and (2) of this section do 
not apply to:
    (A) Making a pro se filing of any kind;
    (B) Submitting a request or appeal under the Freedom of Information 
Act, the Privacy Act, or the Government in the Sunshine Act;
    (C) Testifying under oath (except that a former employee who is 
subject to the restrictions contained in paragraph (b)(1)(i) of this 
section with respect to a particular matter may not, except pursuant to 
court order, serve as an expert witness for any person other than the 
United States in that same matter);
    (D) Submitting a statement required to be made under penalty of 
perjury; or
    (E) Appearing on behalf of the United States.
    (ii) With the exception of subparagraph (b)(1)(iv), paragraphs (b) 
(1) and (2) of this section do not apply to participating in a 
Commission rulemaking proceeding, including submitting comments on a 
matter on which the Commission has invited public comment.
    (iii) Paragraph (b)(1)(iv) of this section does not apply to 
submitting a statement based on the former employee's own special 
knowledge in the particular area that is the subject of the statement, 
provided that no compensation is thereby received, other than that 
regularly provided by law or by Sec. 4.5 for witnesses.
    (iv) Paragraph (b)(2) of this section does not apply to filing a 
premerger notification form or participating in subsequent events 
concerning compliance or noncompliance with Section 7A of the Clayton 
Act, 15 U.S.C. 18a, or any regulation issued under that section.
    (4) Request Contents. Clearance requests filed pursuant to Sec. 
4.1(b)(2) shall contain:
    (i) The name and matter number (if known) of the proceeding or 
investigation in question;
    (ii) A description of the contemplated participation;
    (iii) The name of the Commission office(s) or division(s) in which 
the former employee was employed and the position(s) the employee 
occupied;
    (iv) A statement whether, while employed by the Commission, the 
former employee participated in any proceeding or investigation 
concerning

[[Page 87]]

the same company, individual, or industry currently involved in the 
matter in question;
    (v) A certification that while employed by the Commission, the 
employee never participated personally and substantially in the same 
matter or proceeding;
    (vi) If the employee's Commission employment terminated within the 
past two years, a certification that the matter was not pending under 
the employee's official responsibility during any part of the one year 
before the employee's termination;
    (vii) If the employee's Commission employment terminated within the 
past three years, either a declaration that nonpublic documents or 
information pertaining to the proceeding or investigation in question, 
and of the kind delineated in Sec. 4.10(a), never came to the 
employee's attention, or a description of why the employee believes that 
such nonpublic documents or information could not confer a present 
advantage to the employee or to the employee's client in the proceeding 
or investigation in question; and
    (viii) A certification that the employee has read, and understands, 
both the criminal conflict of interest law on post-employment activities 
(18 U.S.C. 207) and this Rule in their entirety.
    (5) Definitions. The following definitions apply for purposes of 
this section:
    (i) Behind-the-scenes participation includes any form of 
professional consultation, assistance, or advice to anyone about the 
proceeding or investigation in question, whether formal or informal, 
oral or written, direct or indirect.
    (ii) Communicate to or appear before means making any oral or 
written communication to, or any formal or informal appearance before, 
the Commission or any of its members or employees on behalf of any 
person (except the United States) with the intent to influence.
    (iii) Directly resulted from means that the proceeding or 
investigation in question emanated from an earlier phase of the same 
proceeding or investigation or from a directly linked, antecedent 
investigation. The existence of some attenuated connection between a 
proceeding or investigation that was pending during the requester's 
tenure and the proceeding or investigation in question does not 
constitute a direct result.
    (iv) Pending under the employee's official responsibility means that 
the former employee had the direct administrative or operating authority 
to approve, disapprove, or otherwise direct official actions in the 
proceeding or investigation, irrespective of whether the employee's 
authority was intermediate or final, and whether it was exercisable 
alone or only in conjunction with others.
    (v) Personal and substantial participation. A former employee 
participated in the proceeding or investigation personally if the 
employee either participated directly or directed a subordinate in doing 
so. The employee participated substantially if the involvement was 
significant to the matter or reasonably appeared to be significant. A 
series of peripheral involvements may be considered insubstantial, while 
a single act of approving or participating in a critical step may be 
considered substantial.
    (vi) Present advantage. Whether exposure to nonpublic information 
about the proceeding or investigation could confer a present advantage 
to a former employee will be analyzed and determined on a case-by-case 
basis. Relevant factors include, inter alia, the nature and age of the 
information, its relation and current importance to the proceeding or 
investigation in question, and the amount of time that has passed since 
the employee left the Commission.
    (vii) Proceeding or investigation shall be interpreted broadly and 
includes an adjudicative or other proceeding; the consideration of an 
application; a request for a ruling or other determination; a contract; 
a claim; a controversy; an investigation; or an interpretive ruling.
    (6) Advice as to Whether Clearance Request is Required. A former 
employee may ask the General Counsel, either orally or in writing, 
whether the employee is required to file a request for clearance to 
participate in a Commission matter pursuant to paragraph (b)(2) of this 
section. The General

[[Page 88]]

Counsel, or the General Counsel's designee, will make any such 
determination within three business days.
    (7) Deadline for Determining Clearance Requests. By the close of the 
tenth business day after the date on which the clearance request is 
filed, the General Counsel, or the General Counsel's designee, will 
notify the requester either that:
    (i) the request for clearance has been granted;
    (ii) the General Counsel or the General Counsel's designee has 
decided to recommend that the Commission prohibit the requester's 
participation; or
    (iii) the General Counsel or the General Counsel's designee is, for 
good cause, extending the period for reaching a determination on the 
request by up to an additional ten business days.
    (8) Participation of Partners or Associates of Former Employees. (i) 
If a former employee is prohibited from participating in a proceeding or 
investigation by virtue of having worked on the matter personally and 
substantially while a Commission employee, no partner or legal or 
business associate of that individual may participate except after 
filing with the Secretary of the Commission an affidavit attesting that:
    (A) The former employee will not participate in the proceeding or 
investigation in any way, directly or indirectly (and describing how the 
former employee will be screened from participating);
    (B) The former employee will not share in any fees resulting from 
the participation;
    (C) Everyone who intends to participate is aware of the requirement 
that the former employee be screened;
    (D) The client(s) have been informed; and
    (E) The matter was not brought to the participant(s) through the 
active solicitation of the former employee.
    (ii) If the Commission finds that the screening measures being taken 
are unsatisfactory or that the matter was brought to the participant(s) 
through the active solicitation of the former employee, the Commission 
will notify the participant(s) to cease the representation immediately.
    (9) Effect on Other Standards. The restrictions and procedures in 
this section are intended to apply in lieu of restrictions and 
procedures that may be adopted by any state or jurisdiction, insofar as 
such restrictions and procedures apply to appearances or participation 
in Commission proceedings or investigations. Nothing in this section 
supersedes other standards of conduct applicable under paragraph (e) of 
this section. Requests for advice about this section, or about any 
matter related to other applicable rules and standards of ethical 
conduct, shall be directed to the Office of the General Counsel.
    (c) Public Disclosure. Any request for clearance filed by a former 
member or employee pursuant to this section, as well as any written 
response, are part of the public records of the Commission, except for 
information exempt from disclosure under Sec. 4.10(a) of this chapter. 
Information identifying the subject of a nonpublic Commission 
investigation will be redacted from any request for clearance or other 
document before it is placed on the public record.
    (d) Notice of appearance. Any attorney desiring to appear before the 
Commission or an Administrative Law Judge on behalf of a person or party 
shall file with the Secretary of the Commission a written notice of 
appearance, stating the basis for eligibility under this section and 
including the attorney's jurisdiction of admission/qualification, 
attorney identification number, if applicable, and a statement by the 
appearing attorney attesting to his/her good standing within the legal 
profession. No other application shall be required for admission to 
practice, and no register of attorneys will be maintained.
    (e) Standards of conduct; disbarment. (1) All attorneys practicing 
before the Commission shall conform to the standards of ethical conduct 
required by the bars of which the attorneys are members.
    (2) If for good cause shown, the Commission shall be of the opinion 
that any attorney is not conforming to such standards, or that he has 
been otherwise guilty of conduct warranting disciplinary action, the 
Commission may issue an order requiring such attorney to show cause why 
he should not be suspended or disbarred from practice

[[Page 89]]

before the Commission. The alleged offender shall be granted due 
opportunity to be heard in his own defense and may be represented by 
counsel. Thereafter, if warranted by the facts, the Commission may issue 
against the attorney an order of reprimand, suspension, or disbarment.

[32 FR 8456, June 13, 1967, as amended at 40 FR 15235, Apr. 4, 1975; 41 
FR 16453, Apr. 19, 1976; 46 FR 26295, May 12, 1981; 48 FR 44767, Sept. 
30, 1983; 50 FR 50781, Dec. 12, 1985; 50 FR 53306, Dec. 31, 1985; 56 FR 
44139, Sept. 27, 1991; 58 FR 40737, July 30, 1993; 63 FR 15758, Apr. 1, 
1998; 64 FR 14830, Mar. 29, 1999; 66 FR 13645, Mar. 7, 2001; 66 FR 
64143, Dec. 12, 2001]



Sec. 4.2  Requirements as to form, and filing of documents other 
than correspondence.

    (a) Filing. (1) Except as otherwise provided, all documents 
submitted to the Commission, including those addressed to the 
Administrative Law Judge, shall be filed with the Secretary of the 
Commission; Provided, however, That informal applications or requests 
may be submitted directly to the official in charge of any Bureau, 
Division, or Office of the Commission, or to the Administrative Law 
Judge.
    (2) Documents submitted to the Commission in response to a Civil 
Investigative Demand under section 20 of the FTC Act shall be filed with 
the custodian or deputy custodian named in the demand.
    (b) Title. Documents shall clearly show the file or docket number 
and title of the action in connection with which they are filed.
    (c) Paper and electronic copies of and service of filings before the 
Commission, and of filings before an ALJ in adjudicative proceedings. 
(1) Except as otherwise provided, each document filed before the 
Commission, whether in an adjudicative or a nonadjudicative proceeding, 
shall be filed with Secretary of the Commission, and shall include a 
paper original, twelve (12) paper copies, and an electronic copy (in 
ASCII format, WordPerfect, or Microsoft Word). Except as otherwise 
provided, each document filed by a party in an adjudicative proceeding 
before an ALJ shall be filed with the Secretary of the Commission, and 
shall include a paper original, one (1) paper copy and an electronic 
copy (in ASCII format, WordPerfect, or Microsoft Word).
    (2) The first page of the paper original of each such document shall 
be clearly labeled either public, or in camera or confidential. If the 
document is labeled in camera or confidential, it must include as an 
attachment either a motion requesting in camera or otherwise 
confidential treatment, in the form prescribed by Sec. 3.45(b), or a 
copy of a Commission, ALJ, or federal court order granting such 
treatment. The document must also include as a separate attachment a set 
of only those pages of the document on which the in camera or otherwise 
confidential material appears.
    (3) The electronic copy of each such public document shall be filed 
by e-mail, as the Secretary shall direct, in a manner that is consistent 
with technical standards, if any, that the Judicial Conference of the 
United States establishes, except that the electronic copy of each such 
document containing in camera or otherwise confidential material shall 
be placed on a diskette so labeled, which shall be physically attached 
to the paper original, and not transmitted by e-mail. The electronic 
copy of all documents shall include a certification by the filing party 
that the copy is a true and correct copy of the paper original, and that 
a paper copy with an original signature is being filed with the 
Secretary of the Commission on the same day by other means.
    (4) A paper copy of each such document in an adjudicative proceeding 
shall be served by the party filing the document or person acting for 
that party on all other parties pursuant to Sec. 4.4, at or before the 
time the paper original is filed.
    (d) Paper and electronic copies of all other documents filed with 
the Commission. Except as otherwise provided, each document to which 
paragraph (c) of this section does not apply, such as public comments in 
Commission proceedings, may be filed with the Commission in either paper 
or electronic form. If such a document contains nonpublic information, 
it must be filed in paper form with the Secretary of the Commission, and 
the first page of the

[[Page 90]]

document must be clearly labeled confidential. If the document does not 
contain any nonpublic information, it may instead be filed in electronic 
form (in ASCII format, WordPerfect, or Microsoft Word) by e-mail, as the 
Commission or the Secretary may direct.
    (e) Form. (1) Documents filed with the Secretary of the Commission, 
other than briefs in support of appeals from initial decisions, shall be 
printed, typewritten, or otherwise processed in permanent form and on 
good unglazed paper. A motion or other paper filed in an adjudicative 
proceeding shall contain a caption setting forth the title of the case, 
the docket number, and a brief descriptive title indicating the purpose 
of the paper.
    (2) Briefs filed on an appeal from an initial decision shall be in 
the form prescribed by Sec. 3.52(e).
    (f) Signature. (1) The original of each document filed shall have a 
hand signed signature by an attorney of record for the party, or in the 
case of parties not represented by counsel, by the party itself, or by a 
partner if a partnership, or by an officer of the party if it is a 
corporation or an unincorporated association.
    (2) Signing a document constitutes a representation by the signer 
that he or she has read it; that to the best of his or her knowledge, 
information, and belief, the statements made in it are true; that it is 
not interposed for delay; and that to the best of his or her knowledge, 
information, and belief, it complies with the rules in this part. If a 
document is not signed or is signed with intent to defeat the purpose of 
this section, it may be stricken as sham and false and the proceeding 
may go forward as though the document had not been filed.
    (g) Authority to reject documents for filing. The Secretary of the 
Commission may reject a document for filing that fails to comply with 
the Commission's rules. In cases of extreme hardship, the Secretary may 
excuse compliance with a rule regarding the filing of documents if the 
Secretary determines that the non-compliance would not interfere with 
the functions of the Commission.

[66 FR 17632, Apr. 3, 2001; 66 FR 20527, Apr. 23, 2001]



Sec. 4.3  Time.

    (a) Computation. Computation of any period of time prescribed or 
allowed by the rules in this chapter, by order of the Commission or an 
Administrative Law Judge, or by any applicable statute, shall begin with 
the first business day following that on which the act, event, or 
development initiating such period of time shall have occurred. When the 
last day of the period so computed is a Saturday, Sunday, or national 
holiday, or other day on which the office of the Commission is closed, 
the period shall run until the end of the next following business day. 
When such period of time, with the intervening Saturdays, Sundays, and 
national holidays counted, is seven (7) days or less, each of the 
Saturdays, Sundays, and such holidays shall be excluded from the 
computation. When such period of time, with the intervening Saturdays, 
Sundays, and national holidays counted, exceeds seven (7) days, each of 
the Saturdays, Sundays, and such holidays shall be included in the 
computation.
    (b) Extensions. For good cause shown, the Administrative Law Judge 
may, in any proceeding before him, extend any time limit prescribed or 
allowed by the rules in this chapter or by order of the Commission or 
the Administrative Law Judge, except those governing the filing of 
interlocutory appeals and initial decisions and those expressly 
requiring Commission action. Except as otherwise provided by law, the 
Commission, for good cause shown, may extend any time limit prescribed 
by the rules in this chapter or by order of the Commission or an 
Administrative Law Judge: Provided, however, That in a proceeding 
pending before an Administrative Law Judge, any motion on which he may 
properly rule shall be made to him. Notwithstanding the above, where a 
motion to extend is made after the expiration of the specified period, 
the Administrative Law Judge or the Commission may consider the motion 
where the untimely filing was the result of excusable neglect.
    (c) Additional time after service by mail. Whenever a party in an 
adjudicative proceeding under part 3 of the rules is required or 
permitted to do an act within a prescribed period after service

[[Page 91]]

of a paper upon it and the paper is served by first-class mail pursuant 
to Sec. 4.4(a)(3) or Sec. 4.4(b), 3 days shall be added to the 
prescribed period.
    (d) Date of filing. Documents must be received in the office of the 
Secretary of the Commission by 5:00 p.m. Eastern time to be deemed filed 
that day. Any documents received by the agency after 5:00 p.m. will be 
deemed filed the following business day.

[32 FR 8456, June 13, 1967, as amended at 42 FR 30150, June 13, 1977; 50 
FR 28097, July 10, 1985; 50 FR 53306, Dec. 31, 1985; 66 FR 17633, Apr. 
3, 2001]



Sec. 4.4  Service.

    (a) By the Commission. (1) Service of complaints, initial decisions, 
final orders and other processes of the Commission under 15 U.S.C. 45 
may be effected as follows:
    (i) By registered or certified mail. A copy of the document shall be 
addressed to the person, partnership, corporation or unincorporated 
association to be served at his, her or its residence or principal 
office or place of business, registered or certified, and mailed; 
service under this provision is complete upon delivery of the document 
by the Post Office; or
    (ii) By delivery to an individual. A copy thereof may be delivered 
to the person to be served, or to a member of the partnership to be 
served, or to the president, secretary, or other executive officer or a 
director of the corporation or unincorporated association to be served; 
service under this provision is complete upon delivery as specified 
herein; or
    (iii) By delivery to an address. A copy thereof may be left at the 
principal office or place of business of the person, partnership, 
corporation, or unincorporated association, or it may be left at the 
residence of the person or of a member of the partnership or of an 
executive officer or director of the corporation, or unincorporated 
association to be served; service under this provision is complete upon 
delivery as specified herein.
    (2) All other orders and notices, including subpoenas, orders 
requiring access, orders to file annual and special reports, and notices 
of default, may be served by any method reasonably certain to inform the 
affected person, partnership, corporation or unincorporated association, 
including any method specified in paragraph (a)(1), except that civil 
investigative demands may only be served in the manner provided by 
section 20(c)(7) of the FTC Act (in the case of service on a 
partnership, corporation, association, or other legal entity) or section 
20(c)(8) of the FTC Act (in the case of a natural person). Service under 
this provision is complete upon delivery by the Post Office or upon 
personal delivery.
    (3) All documents served in adjudicative proceedings under the 
Commission's Rules of Practice, 16 CFR Part 3, other than complaints and 
initial, interlocutory, and final decisions and orders, may be served by 
personal delivery (including delivery by courier), or by first-class 
mail, and shall be deemed served on the day of personal delivery or the 
day of mailing.
    (4) When a party has appeared in a proceeding by an attorney, 
service on that individual of any document pertaining to the proceeding 
other than a complaint shall be deemed service upon the party. However, 
service of those documents specified in paragraph (a)(1) of this section 
shall first be attempted in accordance with the provision of paragraphs 
(a)(1) (i), (ii), and (iii) of this section.
    (b) By other parties. Service of documents by parties other than the 
Commission shall be by delivering copies thereof as follows: Upon the 
Commission, by personal delivery (including delivery by courier) or 
delivery by first-class mail to the Office of the Secretary of the 
Commission and, in adjudicative proceedings under the Commission's Rules 
of Practice, 16 CFR Part 3, to the lead complaint counsel, the Assistant 
Director in the Bureau of Competition, the Associate Director in the 
Bureau of Consumer Protection, or the Director of the Regional Office of 
complaint counsel, with a copy to the Administrative Law Judge. Upon a 
party other than the Commission or Commission counsel, service shall be 
by personal delivery (including delivery by courier) or delivery by 
first-class mail with a copy to the Administrative Law Judge. If the 
party is an individual or partnership, delivery

[[Page 92]]

shall be to such individual or a member of the partnership; if a 
corporation or unincorporated association, to an officer or agent 
authorized to accept service of process therefor. Personal service 
includes handling the document to be served to the individual, partner, 
officer, or agent; leaving it at his or her office with a person in 
charge thereof; or, if there is no one in charge or if the office is 
closed or if the party has no office, leaving it at his or her dwelling 
house or usual place of abode with some person of suitable age and 
discretion then residing therein. Documents served in adjudicative 
proceedings under part 3 of the Commission's Rules of Practice shall be 
deemed served on the day of personal service or the day of mailing. All 
other documents shall be deemed served on the day of personal service or 
on the day of delivery by the Post Office.
    (c) Proof of service. In an adjudicative proceeding under the 
Commission's Rules of Practice, 16 CFR Part 3, papers presented for 
filing shall contain proof of service in the form of a statement of the 
date and manner of service and of the names of the persons served, 
certified by the person who made service. Proof of service must appear 
on or be affixed to the papers filed.

[50 FR 28097, July 10, 1985, as amended at 66 FR 17633, Apr. 3, 2001; 66 
FR 20527, Apr. 23, 2001]



Sec. 4.5  Fees.

    (a) Deponents and witnesses. Any person compelled to appear in 
person in response to subpoena shall be paid the same fees and mileage 
as are paid witnesses in the courts of the United States.
    (b) Presiding officers. Officers before whom depositions are taken 
shall be entitled to the same fees as are paid for like services in the 
courts of the United States.
    (c) Responsibility. The fees and mileage referred to in this section 
shall be paid by the party at whose instance deponents or witnesses 
appear.

[32 FR 8456, June 13, 1967]



Sec. 4.6  Cooperation with other agencies.

    It is the policy of the Commission to cooperate with other 
governmental agencies to avoid unnecessary overlapping or duplication of 
regulatory functions.

[32 FR 8456, June 13, 1967]



Sec. 4.7  Ex parte communications.

    (a) Definitions. For purposes of this section, ex parte 
communication means an oral or written communication not on the public 
record with respect to which reasonable prior notice to all parties is 
not given, but it shall not include requests for status reports on any 
matter or proceeding.
    (b) Prohibited ex parte communications. While a proceeding is in 
adjudicative status within the Commission, except to the extent required 
for the disposition of ex parte matters as authorized by law:
    (1) No person not employed by the Commission, and no employee or 
agent of the Commission who performs investigative or prosecuting 
functions in adjudicative proceedings, shall make or knowingly cause to 
be made to any member of the Commission, or to the Administrative Law 
Judge, or to any other employee who is or who reasonably may be expected 
to be involved in the decisional process in the proceeding, an ex parte 
communciation relevant to the merits of that or a factually related 
proceeding; and
    (2) No member of the Commission, the Administrative Law Judge, or 
any other employee who is or who reasonably may be expected to be 
involved in the decisional process in the proceeding, shall make or 
knowingly cause to be made to any person not employed by the Commission, 
or to any employee or agent of the Commission who performs investigative 
or prosecuting functions in adjudicative proceedings, an ex parte 
communication relevant to the merits of that or a factually related 
proceeding.
    (c) Procedures. A Commissioner, the Administrative Law Judge or any 
other employee who is or who may reasonably be expected to be involved 
in the decisional process who receives or who make or knowingly causes 
to be made, a communication prohibited by paragraph (b) of this section 
shall promptly provide to the Secretary of the Commission:
    (1) All such written communications;

[[Page 93]]

    (2) Memoranda stating the substance of and circumstances of all such 
oral communications; and
    (3) All written responses, and memoranda stating the substance of 
all oral responses, to the materials described in paragraphs (c) (1) and 
(2) of this section. The Secretary shall make relevant portions of any 
such materials part of the public record of the Commission, pursuant to 
Sec. 4.9, and place them in the docket binder of the proceeding to 
which it pertains, but they will not be considered by the Commission as 
part of the record for purposes of decision unless introduced into 
evidence in the proceeding. The Secretary shall also send copies of the 
materials to or otherwise notify all parties to the proceeding.
    (d) Sanctions. (1) Upon receipt of an ex parte communication 
knowingly made or knowingly caused to be made by a party and prohibited 
by paragraph (b) of this section, the Commission, Administrative Law 
Judge, or other employee presiding over the proceeding may, to the 
extent consistent with the interests of justice and the policy of the 
underlying statutes administered by the Commission, require the party to 
show cause why his claim or interest in the proceeding should not be 
dismissed, denied, disregarded, or otherwise adversely affected on 
account of such violation. The Commission may take such action as it 
considers appropriate, including but not limited to, action under Sec. 
4.1(e)(2) and 5 U.S.C. 556(d).
    (2) A person, not a party to the proceeding who knowingly makes or 
causes to be made an ex parte communication prohibited by paragraph (b) 
of this section shall be subject to all sanctions provided herein if he 
subsequently becomes a party to the proceeding.
    (e) The prohibitions of this section shall apply in an adjudicative 
proceeding from the time the Commission votes to issue a complaint 
pursuant to Sec. 3.11, to conduct adjudicative hearings pursuant to 
Sec. 3.13, or to issue an order to show cause pursuant to Sec. 
3.72(b), or from the time an order by a U.S. court of appeals remanding 
a Commission decision and order for further proceedings becomes 
effective, until the time the Commission votes to enter its decision in 
the proceeding and the time permitted by Sec. 3.55 to seek 
reconsideration of that decision has elapsed. For purposes of this 
section, an order of remand by a U.S. court of appeals shall be deemed 
to become effective when the Commission determines not to file a 
petition for a writ of certiorari, or when the time for filing such a 
petition has expired without a petition having been filed, or when such 
a petition has been denied. If a petition for reconsideration of a 
Commission decision is filed pursuant to Sec. 3.55, the provisions of 
this section shall apply until the time the Commission votes to enter an 
order disposing of the petition. In addition, the prohibitions of this 
section shall apply with respect to communications concerning an 
application for stay filed with the Commission pursuant to Sec. 3.56 
from the time that the application is filed until its disposition.
    (f) The prohibitions of paragraph (b) of this section do not apply 
to a communication occasioned by and concerning a nonadjudicative 
function of the Commission, including such functions as the initiation, 
conduct, or disposition of a separate investigation, the issuance of a 
complaint, or the initiation of a rulemaking or other proceeding, 
whether or not it involves a party already in an adjudicative 
proceeding; preparations for judicial review of a Commission order; a 
proceeding outside the scope of Sec. 3.2, including a matter in state 
or federal court or before another governmental agency; a 
nonadjudicative function of the Commission, including but not limited to 
an obligation under Sec. 4.11 or a communication with Congress; or the 
disposition of a consent settlement under Sec. 3.25 concerning some or 
all of the charges involved in a complaint and executed by some or all 
respondents. The Commission, at its discretion and under such 
restrictions as it may deem appropriate, may disclose to the public or 
to respondent(s) in a pending adjudicative proceeding a communication 
made exempt by this paragraph from the prohibitions of paragraph (b) of 
this section, however, when the Commission determines that the interests 
of justice would be served by the disclosure. The prohibitions of 
paragraph (b) of this section also do not

[[Page 94]]

apply to a communication between any member of the Commission, the 
Administrative Law Judge, or any other employee who is or who reasonably 
may be expected to be involved in the decisional process, and any 
employee who has been directed by the Commission or requested by an 
individual Commissioner or Administrative Law Judge to assist in the 
decision of the adjudicative proceeding. Such employee shall not, 
however, have performed an investigative or prosecuting function in that 
or a factually related proceeding.

[42 FR 43974, Sept. 1, 1977, as amended at 44 FR 40637, July 12, 1979; 
46 FR 32435, June 23, 1981; 50 FR 53306, Dec. 31, 1985; 51 FR 36802, 
Oct. 16, 1986; 57 FR 10805, Mar. 31, 1992; 60 FR 37748, July 21, 1995; 
60 FR 67325, Dec. 29, 1995]



Sec. 4.8  Costs for obtaining Commission records.

    (a) Definitions. For the purpose of this section:
    (1) The term search includes all time spent looking, manually or by 
automated means, for material that is responsive to a request, including 
page-by-page or line-by-line identification of material within 
documents.
    (2) The term duplication refers to the process of making a copy of a 
document in order to respond to a request for Commission records.
    (3) The term review refers to the examination of documents located 
in response to a request to determine whether any portion of such 
documents may be withheld, and the reduction or other processing of 
documents for disclosure. Review does not include time spent resolving 
general legal or policy issues regarding the release of the document.
    (4) The term direct costs means expenditures that the Commission 
actually incurs in processing requests. Not included in direct costs are 
overhead expenses such as costs of document review facilities or the 
costs of heating or lighting such a facility or other facilities in 
which records are stored. The direct costs of specific services are set 
forth in Sec. 4.8(b)(6).
    (b) Fees. User fees pursuant to 31 U.S.C. 483(a) and 5 U.S.C. 552(a) 
shall be charged according to this paragraph.
    (1) Commercial use requesters. Commercial use requesters will be 
charged for the direct costs to search for, review, and duplicate 
documents. A commercial use requester is a requester who seeks 
information for a use or purpose that furthers the commercial, trade, or 
profit interests of the requester or the person on whose behalf the 
request is made.
    (2) Educational requesters, non-commercial scientific institution 
requesters, and representative of the news media. Requesters in these 
categories will be charged for the direct costs to duplicate documents, 
excluding charges for the first 100 pages. An educational institution is 
a preschool, a public or private elementary or secondary school, an 
institution of graduate higher education, an institution of 
undergraduate higher education, an institution of professional 
education, and an institution of vocational education, which operates a 
program or programs of scholarly research. A non-commercial scientific 
institution is an institution that is not operated on a commercial basis 
as that term is referenced in paragraph (b)(1) of this section, and that 
is operated solely to conduct scientific research the results of which 
are not intended to promote any particular product or industry. A 
representative of the news media is any person actively gathering news 
for an entity that is organized and operated to publish or broadcast 
news to the public. News means information that is about current events 
or that would be of current interest to the public.
    (3) Other requesters. Other requesters will be charged for the 
direct costs to search for and duplicate documents, except that the 
first 100 pages of duplication and the first two hours of search time 
shall be furnished without charge.
    (4) Waiver of small charges. Notwithstanding the provisions of 
paragraphs (b)(1), (2), and (3) of this section, charges will be waived 
if the total chargeable fees for a request do not exceed $14.00.
    (5) Materials available without charge. These provisions do not 
apply to recent Commission decisions and other materials that may be 
made available to all requesters without charge while supplies last.

[[Page 95]]

    (6) Schedule of direct costs. The following uniform schedule of fees 
applies to records held by all constituent units of the Commission:

 
 
 
Paper Fees:
    Paper copy (up to 8.5x14).
    Reproduced by Commission...............  $0.14 per page.
    Reproduced by Requester................   0.05 per page.
 
Microfiche Fees:
    Film Copy--Paper to 16mm film..........   0.04 per frame.
    Fiche Copy--Paper to 105mm fiche.......   0.08 per frame.
    Film Copy--Duplication of existing 100    9.50 per roll.
     ft. roll of 16mm film.
    Fiche Copy--Duplication of existing       0.26 per fiche.
     105mm fiche.
    Paper Copy--Converting existing 16mm      0.26 per page.
     film to paper (Conversion by
     Commission Staff).
    Paper Copy--Converting existing 105mm     0.23 per page.
     fiche to paper (Conversion by
     Commission Staff).
    Film Cassettes.........................   2.00 per cassette.
 
Electronic Services:
    Converting paper into electronic format   2.50 per page.
     (scanning).
    Computer programming...................   8.00 per qtr. hour.
 
Other Fees:
    Computer Tape..........................   18.50 each.
    Certification..........................   10.35 each.
    Express Mail...........................   3.50 for first pound and
                                              3.67 for each additional
                                              pound (up to $15.00).
 

                         Search and Review Fees

    Agency staff is divided into three categories: clerical, attorney/
economist, and other professional. Fees for search and review are 
assessed on a quarter-hourly basis, and are determined by identifying 
the category into which the staff member(s) conducting the search or 
review belong(s), determining the average quarter-hourly wages of all 
staff members within that category, and adding 16 percent to reflect the 
cost of additional benefits accorded to government employees. The exact 
fees are calculated and announced periodically and are available from 
the Consumer Response Center, Federal Trade Commission, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580; (202) 326-2222.
    (c) Information to determine fees. Each request for records shall 
set forth whether the request is made for other than commercial purposes 
and whether the requester is an educational institution, a noncommercial 
scientific institution, or a representative of the news media. The 
deciding official (as designated by the General Counsel) initially, or 
the General Counsel on appeal, will use this information, any additional 
information provided by the requester, and any other relevant 
information to determine the appropriate fee category in which to place 
the requester.
    (d) Agreement to pay fees. (1) Each request that does not contain an 
application for a fee waiver shall specifically indicate the requester's 
willingness either:
    (i) To pay, in accordance with Sec. 4.8(b) of these rules, whatever 
fees may be charged for processing the request; or
    (ii) A willingness to pay such fees up to a specified amount.
    (2) Each request that contains an application for a fee waiver must 
specifically indicate:
    (i) The requester's willingness to pay, in accordance with Sec. 
4.8(b) of the rules, whatever fees may be charged for processing the 
request;
    (ii) The requester's willingness to pay fees up to a specified 
amount; or
    (iii) That the requester is not willing to pay fees if the waiver is 
not granted.
    (3) If the agreement required by this section is absent, and if the 
estimated fees exceed $25.00, the requester will be advised of the 
estimated fees and the

[[Page 96]]

request will not be processed until the requester agrees to pay such 
fees.
    (e) Public interest fee waivers--(1) Procedures. A requester may 
apply for a waiver of fees. The requester shall explain why a waiver is 
appropriate under the standards set forth in this paragraph. The 
application shall also include a statement, as provided by paragraph (d) 
of this section, of whether the requester agrees to pay costs if the 
waiver is denied. The deciding official (as designated by the General 
Counsel) initially, or the General Counsel on appeal, will rule on 
applications for fee waivers.
    (2) Standards. (i) The first requirement for a fee waiver is that 
disclosure will likely contribute significantly to public understanding 
of the operations or activities of the government. This requirement 
shall be met if:
    (A) The subject matter of the requested information concerns the 
operations or activities of the Federal government;
    (B) The disclosure is likely to contribute to an understanding of 
these operations or activities;
    (C) The understanding to which disclosure is likely to contribute is 
the understanding of the public at large, as opposed to the 
understanding of the individual requester or a narrow segment of 
interested persons; and
    (D) The likely contribution to public understanding will be 
significant.
    (ii) The second requirement for a fee waiver is that the request not 
be primarily in the commercial interest of the requester. Satisfaction 
of this requirement shall be determined by considering:
    (A) Whether the requester has a commercial interest that would be 
furthered by the requested disclosure; and
    (B) If so, whether the public interest in disclosure is outweighed 
by the identified commercial interest of the requester so as to render 
the disclosure primarily in the requester's commercial interest.
    (f) Unsuccessful searches. Charges may be assessed for search time 
even if the agency fails to locate any responsive records or if it 
locates only records that are determined to be exempt from disclosure.
    (g) Aggregating requests. If the deciding official (as designated by 
the General Counsel) initially, or the General Counsel on appeal, 
reasonably believes that a requester, or a group of requesters acting in 
concert, is attempting to evade an assessment of fees by dividing a 
single request into a series of smaller requests, the requests may be 
aggregated and fees charged accordingly.
    (h) Advance payment. If the deciding official (as designated by the 
General Counsel) initially, or the General Counsel on appeal, estimates 
or determines that allowable charges that a requester may be required to 
pay are likely to exceed $250.00, or if the requester has previously 
failed to pay a fee within 30 days of the date of billing, the requester 
may be required to pay some or all of the total estimated charge in 
advance. Further, the requester may be required to pay all unpaid bills, 
including accrued interest, prior to processing the request.
    (i) Means of payment. Payment shall be made by check or money order 
payable to the Treasury of the United States.
    (j) Interest charges. The Commission will begin assessing interest 
charges on an unpaid bill starting on the 31st day following the day on 
which the bill was sent. Interest will accrue from the date of the 
billing, and will be calculated at the rate prescribed in 31 U.S.C. 
3717.
    (k) Effect of the Debt Collection Act of 1982 (Pub. L. 97-365) The 
Commission may pursue repayment, where appropriate, by employing the 
provisions of the Debt Collection Act, Public Law 97-365), including 
disclosure to consumer reporting agencies and use of collection 
agencies.

[57 FR 10806, Mar. 31, 1992, as amended at 63 FR 45646, Aug. 26, 1998; 
64 FR 3012, Jan. 20, 1999; 66 FR 64144, Dec. 12, 2001]



Sec. 4.9  The public record.

    (a) General. (1) Materials on the public record of the Commission 
are available for public inspection and copying either routinely or upon 
request.
    (2) Materials that are exempt from mandatory public disclosure, or 
are otherwise not available from the Commission's public record, may be 
made available for inspection and copying only upon request under the 
procedures

[[Page 97]]

set forth in Sec. 4.11 of this part, or as provided in Sec. Sec. 4.10 
(d) through (g), 4.13, and 4.15(b)(3) of this part, or by the 
Commission.
    (3) Location. All of the public records of the Commission are 
available for inspection at the principal office of the Commission on 
each business day from 9 a.m. to 5 p.m., and copies of some of those 
records are available at the regional offices on each business day from 
8:30 a.m. to 5 p.m. Copies of records that the Commission is required to 
make available to the public electronically, pursuant to 5 U.S.C. 
552(a)(2), may be obtained in that format from the Commission's Web site 
on the Internet, WWW.FTC.GOV.
    (4) Copying of public records--(i) Procedures. Reasonable facilities 
for copying public records are provided at each office of the 
Commission. Subject to appropriate limitations and the availability of 
facilities, any person may copy public records available for inspection 
at each of those offices. Further, the agency will provide copies to any 
person upon request. Written requests for copies of public records shall 
be addressed to the Supervisor, Consumer Response Center, and shall 
specify as clearly and accurately as reasonably possible the records 
desired. For records that cannot be specified with complete clarity and 
particularity, requesters shall provide descriptions sufficient to 
enable qualified Commission personnel to locate the records sought. In 
any instance, the Commission, the Supervisor of the Consumer Response 
Center, the General Counsel, the deciding official (as designated by the 
General Counsel), or the official in charge of each office may prohibit 
the use of Commission facilities to produce more than one copy of any 
public record, and may refuse to permit the use of such facilities for 
copying records that have been published or are publicly available at 
places other than the offices of the Commission.
    (ii) Costs; agreement to pay costs. Requesters will be charged 
search and duplication costs prescribed by Rule 4.8 for requests under 
this section. All requests shall include a statement of the information 
needed to determine fees, as provided by Sec. 4.8(c), and an agreement 
to pay fees (or a statement that the requester will not pay fees if a 
fee waiver is denied), as provided by Sec. 4.8(d). Requests may also 
include an application for a fee waiver, as provided by Sec. 4.8(e). 
Advance payment may be required, as provided by Sec. 4.8(h).
    (iii) Records for sale at another government agency. If requested 
materials are available for sale at a another government agency, the 
requester will not be provided with copies of the materials but will be 
advised to obtain them from the selling agency.
    (b) Categories. Except to the extent material is confidential, as 
provided in paragraph (c) of this section, the public record of the 
Commission includes, but is not necessarily limited to:
    (1) Commission Organization and Procedures (16 CFR part 0 and 
Sec. Sec. 4.14 through 4.15, 4.17). (i) A current index of opinions, 
orders, statements of policy and interpretations, administrative staff 
manuals, general instructions and other public records of the 
Commission;
    (ii) A current record of the final votes of each member of the 
Commission in all matters of public record, including matters of public 
record decided by notational voting;
    (iii) Descriptions of the Commission's organization, including 
descriptions of where, from whom, and how the public may secure 
information, submit documents or requests, and obtain copies of orders, 
decisions and other materials;
    (iv) Statements of the Commission's general procedures and policies 
and interpretations, its nonadjudicative procedures, its rules of 
practice for adjudicative proceedings, and its miscellaneous rules, 
including descriptions of the nature and requirements of all formal and 
informal procedures available, and
    (v) Reprints of the principal laws under which the Commission 
exercises enforcement or administrative responsibilities.
    (2) Industry Guidance (16 CFR 1.1-1.6). (i) Any advice, advisory 
opinion or response given and required to be made public under 
Sec. Sec. 1.4 and 2.41 (d) or (f) of this chapter (whether by the 
Commission or the staff), together with a statement of supporting 
reasons;

[[Page 98]]

    (ii) Industry guides, digests of advisory opinions and compliance 
advice believed to be of interest to the public generally and other 
administrative interpretations;
    (iii) Transcripts of hearings in all industry guide proceedings, as 
well as written statements filed with or forwarded to the Commission in 
connection with these proceedings; and
    (iv) Petitions filed with the Secretary of the Commission for the 
promulgation or issuance, amendment, or repeal of industry guides.
    (3) Rulemaking (16 CFR 1.7 through 1.26). (i) Petitions filed with 
the Secretary of the Commission for the promulgation or issuance, 
amendment, or repeal of rules or regulations within the scope of 
Sec. Sec. 1.7 and 1.21 of this chapter, and petitions for exemptions;
    (ii) Notices and advance notices of proposed rulemaking and rules 
and orders issued in rulemaking proceedings; and
    (iii) Transcripts of hearings of all rulemaking proceedings, as well 
as written statements filed with or forwarded to the Commission in 
connection with these proceedings.
    (4) Investigations (16 CFR 2.7). (i) Petitions to limit or quash 
compulsory process and the rulings thereon, requests for review by the 
full Commission of those rulings, and Commission rulings on such 
requests; and
    (ii) Closing letters in initial phase and full phase investigations.
    (5) Adjudicative proceedings, stay applications, requests to reopen, 
and litigated orders. (16 CFR 2.51, 3.1 through 3.24, 3.31 through 3.56, 
3.71 through 3.72, 4.7)--Except for transcripts of matters heard in 
camera pursuant to Sec. 3.45 and material filed in camera pursuant to 
Sec. Sec. 3.22, 3.24, 3.45, 3.46, 3.51 and 3.52,
    (i) The versions of pleadings and transcripts of prehearing 
conferences to the extent made available under Sec. 3.21(e), motions, 
certifications, orders, and the transcripts of hearings (including 
public conferences), testimony, oral arguments, and other material made 
a part thereof, and exhibits and material received in evidence or made a 
part of the public record in adjudicative proceedings;
    (ii) Initial decisions of administrative law judges;
    (iii) Orders and opinions in interlocutory matters;
    (iv) Final orders and opinions in adjudications, and rulings on stay 
applications, including separate statements of Commissioners;
    (v) Petitions for reconsideration, and answers thereto, filed 
pursuant to Sec. 3.55;
    (vi) Applications for stay, answers thereto, and replies, filed 
pursuant to Sec. 3.56;
    (vii) Petitions, applications, pleadings, briefs, and other records 
filed by the Commission with the courts in connection with adjudicative, 
injunctive, enforcement, compliance, and condemnation proceedings, and 
in connection with judicial review of Commission actions, and opinions 
and orders of the courts in disposition thereof;
    (viii) Records of ex parte communications in adjudicative 
proceedings and stay applications;
    (ix) Petitions to reopen proceedings and orders to determine whether 
orders should be altered, modified, or set aside in accordance with 
Sec. 2.51; and
    (x) Decisions reopening proceedings, and orders to show cause under 
Sec. 3.72.
    (6) Consent Agreements (16 CFR 2.31 through 2.34, 3.25). (i) 
Agreements containing orders, after acceptance by the Commission 
pursuant to Sec. Sec. 2.34 and 3.25(f) of this chapter;
    (ii) Comments and other materials filed or placed on the public 
record under Sec. Sec. 2.34 and 3.25(f) concerning proposed consent 
agreements and related orders; and
    (iii) Decisions and orders issued and served under Sec. Sec. 2.34 
and 3.25(f), including separate statements of Commissioners.
    (7) Compliance/Enforcement (16 CFR 2.33, 2.41). (i) Reports of 
compliance filed pursuant to the rules in this chapter or pursuant to a 
provision in a Commission order and supplemental materials filed in 
connection with these reports, except for reports of compliance, and 
supplemental materials filed in connection with Commission orders 
requiring divestitures or establishment of business enterprises of 
facilities, which are confidential until the last divestiture or 
establishment of a business enterprise or facility, as required by a 
particular order, has been

[[Page 99]]

finally approved by the Commission, and staff letters to respondents 
advising them that their compliance reports do not warrant any further 
action. At the time each such report is submitted the filing party may 
request confidential treatment in accordance with paragraph (c) of this 
section and the General Counsel or the General Counsel's designee will 
pass upon such request in accordance with that paragraph;
    (ii) Materials required to be made public under 16 CFR 2.41(f) in 
connection with applications for approval of proposed divestitures, 
acquisitions or similar transactions subject to Commission review under 
outstanding orders.
    (8) Access to Documents and Meetings (16 CFR 4.8, 4.11, 4.13, 4.15). 
(i) Letters requesting access to Commission records pursuant to Sec. 
4.11(a) of this chapter and the Freedom of Information Act, 5 U.S.C. 
552, and letters granting or denying such requests (not including access 
requests and answers thereto from the Congress or other government 
agencies);
    (ii) Announcements of Commission meetings as required under the 
Sunshine Act, 5 U.S.C. 552b, including records of the votes to close 
such meetings;
    (iii) Summaries or other explanatory materials relating to matters 
to be considered at open meetings made available pursuant to Sec. 
4.15(b)(3)
    (iv) Commission minutes of open meetings, and, to the extent they 
are not exempt from mandatory public disclosure under the Sunshine Act 
or the Freedom of Information Act, portions of minutes or transcripts of 
closed meetings; and
    (v) A guide for requesting records or information from the 
Commission, including an index of all major information systems, a 
description of major information and record locator systems maintained 
by the Commission, and a handbook for obtaining various types and 
categories of public information.
    (9) Standards of Conduct (16 CFR 5.5 through 5.6, 5.10 through 5.26, 
5.31, 5.57 through 5.68). (i) Memoranda to staff elaborating or 
clarifying standards described in administative staff manuals and part 5 
of this subchapter.
    (10) Miscellaneous (Press Releases, Clearance Requests, Reports 
Filed by or with the Commission, Continuing Guaranties, Registered 
Identification Numbers). (i) Releases by the Commission's Office of 
Public Affairs supplying information concerning the activities of the 
Commission;
    (ii) Applications under Sec. 4.1(b)(2) of this chapter for 
clearance or authorization to appear or participate in a proceeding or 
investigation and of the Commission's responses thereto;
    (iii) Continuing guaranties filed under the Wool, Fur, and Textile 
Acts;
    (iv) Published reports by the staff or by the Commission on economic 
surveys and investigations of general interest;
    (v) Filings by the Commission or by the staff in connection with 
proceedings before other federal agencies or state or local government 
bodies;
    (vi) Registration statements and annual reports filed with the 
Commission by export trade associations, and bulletins, pamphlets, and 
reports with respect to such associations released by the Commission;
    (vii) The identities of holders of registered identification numbers 
issued by the Commission pursuant to Sec. 1.32 of this chapter;
    (viii) The Commission's annual report submitted after the end of 
each fiscal year, summarizing its work during the year (available for 
inspection at each of the offices of the Commission with copies 
obtainable from the Superintendent of Documents, U.S. Government 
Printing Office, Washington, DC 20402) and any other annual reports made 
to Congress on activities of the Commission as required by law;
    (ix) Records, as determined by the General Counsel or his or her 
designee, that have been released in response to a request made under 
the Freedom of Information Act, 5 U.S.C. 552, and which, because of the 
nature of the subject matter, have become or are likely to become the 
subject of subsequent requests for substantially the same records, 
except where some or all of those records would be exempt from 
disclosure under 5 U.S.C. 552 if requested by another party;

[[Page 100]]

    (x) A general index of the records referred to under paragraph 
(b)(10)(ix) of this section;
    (xi) Grants of early termination of waiting periods published in 
accordance with the Hart-Scott-Rodino premerger notification provisions 
of the Clayton Act, 15 U.S.C. 18a(b)(2);
    (xii) Reports on appliance energy consumption or efficiency filed 
with the Commission pursuant to Sec. 305.8 of this chapter;
    (xiii) Annual filings by professional boxing sanctioning 
organizations as required by the Muhammed Ali Boxing Reform Act, 15 
U.S.C. 6301 note, 6307a-6307h;
    (xiv) Other documents that the Commission has determined to place on 
the public record; and
    (xv) Every amendment, revision, substitute, or repeal of any of the 
foregoing items listed in Sec. 4.9(b)(1) through (10) of this section.
    (c) Confidentiality and in camera material. (1) Persons submitting 
material to the Commission described in this section may designate that 
material or portions of it confidential and request that it be withheld 
from the public record. All requests for confidential treatment shall be 
supported by a showing of justification in light of applicable statutes, 
rules, orders of the Commission or its administrative law judges, orders 
of the courts, or other relevant authority. The General Counsel or the 
General Counsel's designee will act upon such request with due regard 
for legal constraints and the public interest. No such material or 
portions of material (including documents generated by the Commission or 
its staff containing or reflecting such material or portions of 
material) will be placed on the public record until the General Counsel 
or the General Counsel's designee has ruled on the request for 
confidential treatment and provided any prior notice to the submitter 
required by law.
    (2) Motions seeking in camera treatment of material submitted in 
connection with a proceeding under part 3 of these rules, except stay 
applications under Sec. 3.56, shall be filed with the Administrative 
Law Judge who is presiding over the proceeding. Requests for 
confidential treatment of material submitted in connection with a stay 
application shall be made in accordance with Sec. 4.9(c)(1).
    (3) To the extent that any material or portions of material 
otherwise falling within paragraph (b) of this section contain 
information that is not required to be made public under Sec. 4.10 of 
this part, the General Counsel or the General Counsel's designee may 
determine, with due regard for legal constraints and the public 
interest, to withhold such materials from the public record.

[50 FR 50779, Dec. 12, 1985, as amended at 57 FR 10805, Mar. 31, 1992; 
59 FR 34970, July 8, 1994; 60 FR 37749, July 21, 1995; 63 FR 18820, Apr. 
16, 1998; 63 FR 32977, June 17, 1998; 63 FR 45647, Aug. 26, 1998; 64 FR 
46269, Aug. 25, 1999; 66 FR 17633, Apr. 3, 2001; 66 FR 64144, Dec. 12, 
2001]



Sec. 4.10  Nonpublic material.

    (a) The following records and other material of the Commission are 
not required to be made public pursuant to 5 U.S.C. 552.
    (1) Records, except to the extent required to be disclosed under 
other laws or regulations, related solely to the internal personnel 
rules and practices of the Commission. This exemption applies to 
internal rules or instructions to Commission personnel which must be 
kept confidential in order to assure effective performance of the 
functions and activities for which the Commission is responsible and 
which do not affect members of the public.
    (2) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential. As provided in section 
6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), this 
exemption applies to competitively sensitive information, such as costs 
or various types of sales statistics and inventories. It includes trade 
secrets in the nature of formulas, patterns, devices, and processes of 
manufacture, as well as names of customers in which there is a 
proprietary or highly competitive interest.
    (3) Interagency or intra-agency memoranda or letters which would not 
routinely be available by law to a private party in litigation with the 
Commission. This exemption preserves the

[[Page 101]]

existing freedom of Commission officials and employees to engage in full 
and frank communication with each other and with officials and employees 
of other governmental agencies. This exemption includes records of the 
deliberations of the Commission except for the record of the final votes 
of each member of the Commission in every agency proceeding. It includes 
intra agency and interagency reports, memorandums, letters, 
correspondence, work papers, and minutes of meetings, as well as staff 
papers prepared for use within the Commission or between the Commission 
and other governmental agencies. It also includes information scheduled 
for public release, but as to which premature release would be contrary 
to the public interest;
    (4) Personnel and medical files and similar files the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy except to the extent such files or materials must be disclosed 
under other laws or regulations. This exemption applies to personnel and 
medical records and similar records containing private or personal 
information concerning any individual which, if disclosed to any person 
other than the individual concerned or his designated legal 
representative without his permission in writing, would constitute a 
clearly unwarranted invasion of personal privacy. Examples of files 
exempt from disclosure include, but are not limited to:
    (i) The personnel records of the Commission;
    (ii) Files containing reports, records or other material pertaining 
to individual cases in which disciplinary or other administrative action 
has been or may be taken, including records of proceedings pertaining to 
the conduct or performance of duties by Commission personnel;
    (5) Records or information compiled for law enforcement purposes, 
but only to the extent that production of such law enforcement records 
or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution that furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (6) Information contained in or related to examination, operating, 
or condition reports prepared by, on behalf of, or for the use of an 
agency responsible for the regulation or supervision of financial 
institutions;
    (7) Geological and geophysical information and data, including maps, 
concerning wells; and
    (8) Material, as that term is defined in section 21(a) of the 
Federal Trade Commission Act, which is received by the Commission:
    (i) In an investigation, a purpose of which is to determine whether 
any person may have violated any provision of the laws administered by 
the Commission; and
    (ii) Which is provided pursuant to any compulsory process under the 
Federal Trade Commission Act, 15 U.S.C. 41, et seq., or which is 
provided voluntarily in place of compulsory process in such an 
investigation. See section 21(f) of the Federal Trade Commission Act.
    (9) Material, as that term is defined in section 21(a) of the 
Federal Trade Commission Act, which is received by the Commission 
pursuant to compulsory process in an investigation, a purpose of which 
is to determine whether

[[Page 102]]

any person may have violated any provision of the laws administered by 
the Commission. See section 21(b)(3)(C) of the Federal Trade Commission 
Act.
    (10) Such other material of the Commission as may from time to time 
be designated by the Commission as confidential pursuant to statute or 
Executive Order. This exempts from disclosure any information that has 
been designated nonpublic pursuant to criteria and procedures prescribed 
by Executive Order and that has not been subsequently declassified in 
accordance with applicable procedures. The exemption also preserves the 
full force and effect of statutes that restrict public access to 
specific government records or material.
    (11) Material in an investigation or proceeding that involves a 
possible violation of criminal law, when there is reason to believe that 
the subject of the investigation or proceeding is not aware of its 
pendency, and disclosure of the existence of the investigation could 
reasonably be expected to interfere with enforcement proceedings. When a 
request is made for records under Sec. 4.11(a), the Commission may 
treat the records as not subject to the requirements of the Freedom of 
Information Act.
    (b) With respect to information contained in transcripts of 
Commission meetings, the exemptions contained in paragraph (a) of this 
section, except for paragraphs (a)(3) and (a)(7) of this section, shall 
apply; in addition, such information will not be made available if it is 
likely to have any of the effects described in 5 U.S.C. 552b (c)(5), 
(c)(9), or (c)(10).
    (c) Under section 10 of the Federal Trade Commission Act, any 
officer or employee of the Commission who shall make public any 
information obtained by the Commission, without its authority, unless 
directed by a court, shall be deemed guilty of a misdemeanor, and upon 
conviction thereof, may be punished by a fine not exceeding five 
thousand dollars ($5,000), or by imprisonment not exceeding 1 year, or 
by fine and imprisonment, in the discretion of the court.
    (d) Except as provided in paragraphs (f) or (g) of this section or 
in Sec. 4.11 (b), (c), (d), or (i), no material that is marked or 
otherwise identified as confidential and that is within the scope of 
Sec. 4.10(a)(8), and no material within the scope of Sec. 4.10(a)(9) 
that is not otherwise public, will be made available, without the 
consent of the person who produced the material, to any individual other 
than a duly authorized officer or employee of the Commission or a 
consultant or contractor retained by the Commission who has agreed in 
writing not to disclose the information. All other Commission records 
may be made available to a requester under the procedures set forth in 
Sec. 4.11 or may be disclosed by the Commission except where prohibited 
by law.
    (e) Except as provided in paragraphs (f) or (g) of this section or 
in Sec. 4.11 (b), (c), (d), or (i), material not within the scope of 
Sec. 4.10(a)(8) or Sec. 4.10(a)(9) that is received by the Commission 
and is marked or otherwise identified as confidential may be disclosed 
only if it is determined that the material is not within the scope of 
Sec. 4.10(a)(2), and the submitter is provided at least ten days' 
notice of the intent to disclose the material.
    (f) Nonpublic material obtained by the Commission may be disclosed 
to persons other than the submitter in connection with the taking of 
oral testimony without the consent of the submitter only if the material 
or transcript is not within the scope of Sec. 4.10(a)(2). If the 
material is marked confidential, the submitter will be provided 10 days' 
notice of the intended disclosure or will be afforded an opportunity to 
seek an appropriate protective order.
    (g) Material obtained by the Commission:
    (1) Through compulsory process and protected by section 21(b) of the 
Federal Trade Commission Act, 15 U.S.C. 57b-2(b) or voluntarily in lieu 
thereof and designated by the submitter as confidential and protected by 
section 21(f) of the Federal Trade Commission Act, 15 U.S.C. 57b-2(f), 
and Sec. 4.10(d) of this part; or
    (2) That is designated by the submitter as confidential, and 
protected by section 21(c) of the Federal Trade Commission Act, 15 
U.S.C. 57b-2(c), and Sec. 4.10(e) of this part; or

[[Page 103]]

    (3) That is confidential commercial or financial information 
protected by section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 
46(f), and Sec. 4.10(a)(2) of this part, may be disclosed in Commission 
administrative or court proceedings subject to Commission or court 
protective or in camera orders as appropriate. See Sec. Sec. 1.18(b) 
and 3.45.

Prior to disclosure of such material in a proceeding, the submitter will 
be afforded an opportunity to seek an appropriate protective or in 
camera order. All other material obtained by the Commission may be 
disclosed in Commission administrative or court proceedings at the 
discretion of the Commission except where prohibited by law.

(15 U.S.C. 41 et seq.)

[38 FR 1731, Jan. 18, 1973, as amended at 40 FR 7629, Feb. 21, 1975; 40 
FR 23278, May 29, 1975; 42 FR 13540, Mar. 11, 1977; 46 FR 26291, May 12, 
1981; 49 FR 30166, July 27, 1984; 54 FR 7399, Feb. 21, 1989; 57 FR 
10807, Mar. 31, 1992; 60 FR 37749, July 21, 1995; 63 FR 38473, July 17, 
1998; 65 FR 67259, Nov. 9, 2000; 66 FR 17633, Apr. 3, 2001]



Sec. 4.11  Disclosure requests.

    (a) Freedom of Information Act requests--(1) Initial requests--(i) 
Form and contents; time of receipt. (A) A request under the provisions 
of the Freedom of Information Act, 5 U.S.C. 552, as amended, for access 
to Commission records shall be in writing and addressed as follows: 
Freedom of Information Act Request, Office of the General Counsel, 
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 
20580.
    (B) Failure to mark the envelope and the request in accordance with 
paragraph (a)(1)(i)(A) of this section, or the filing of a request for 
expedited treatment under paragraph (a)(1)(i)(E) of this section, will 
result in the request (or requests, if expedited treatment has been 
requested) being treated as received on the date that the processing 
unit in the Office of General Counsel actually receives the request(s).
    (C) Costs; agreement to pay costs. Requesters will be charged search 
and duplication costs prescribed by Rule 4.8 for requests under this 
section. All requests shall include a statement of the information 
needed to determine fees, as provided by Sec. 4.8(c), and an agreement 
to pay fees (or a statement that the requester will not pay fees if a 
fee waiver is denied), as provided by Sec. 4.8(d). Requests may also 
include an application for a fee waiver, as provided by Sec. 4.8(e). An 
advance payment may be required in appropriate cases as provided by 
Sec. 4.8(h).
    (D) Failure to agree to pay fees. If a request does not include an 
agreement to pay fees, and if the requester is notified of the estimated 
costs pursuant to Rule 4.8(d)(3), the request will be deemed not to have 
been received until the requester agrees to pay such fees. If a 
requester declines to pay fees and is not granted a fee waiver, the 
request will be denied.
    (E) Expedited treatment. Requests may include an application for 
expedited treatment. Where such an application is not included with an 
initial request for access to records under paragraph (a)(1) of this 
section, the application may be included in any appeal of that request 
filed under paragraph (a)(2) of this section. Such application, which 
shall be certified by the requester to be true and correct to the best 
of such person's knowledge and belief, shall describe the compelling 
need for expedited treatment, including an explanation as to why a 
failure to obtain the requested records on an expedited basis could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual, or, with respect to a request made by 
a person primarily engaged in disseminating information, an explanation 
of the urgency to inform the public concerning actual or alleged Federal 
Government activity. The deciding official (as designated by the General 
Counsel) will, within 10 calendar days of receipt of a request for 
expedited treatment, notify the requester, in writing, of the decision 
to either grant or deny the request for expedited treatment, and, if the 
request is denied, advise the requester that this determination may be 
appealed to the General Counsel.
    (F) Records for sale at another government agency. If requested 
materials are available for sale at another government agency, the 
requester will not be provided with copies of the materials

[[Page 104]]

but will be advised to obtain them from the selling agency.
    (ii) Identifiability. (A) A request for access to Commission records 
must reasonably describe the records requested to enable Commission 
personnel to identify and locate them with a reasonable amount of 
effort. A request should be as specific as possible, and include, where 
known, information regarding dates, titles, file designations, location, 
and any other information which may assist the Commission in identifying 
and locating the records requested.
    (B) A denial of a request may state that the description required by 
paragraph (a)(1)(ii)(A) of this section is insufficient to allow 
identification and location of the records.
    (iii) Time limit for initial determination. (A) The deciding 
official (as designated by the General Counsel) will, within 20 working 
days of the receipt of a request, either grant or deny, in whole or in 
part, such request, unless the request has been granted expedited 
treatment in accordance with this section, in which case the request 
will be processed as soon as practicable.
    (B) Except in exceptional circumstances as provided in paragraph 
(a)(1)(iii)(C) of this section, the deciding official (as designated by 
the General Counsel) may extend the time limit by not more than 10 
working days if such extension is:
    (1) Necessary for locating records or transferring them from 
physically separate facilities; or
    (2) Necessary to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are sought in a 
single or series of closely related requests; or
    (3) Necessary for consultation with another agency having a 
substantial interest in the determination, or for consultation among two 
or more components of the Commission having substantial subject matter 
interest therein.
    (C) If the deciding official (as designated by the General Counsel) 
extends the time limit for initial determination pursuant to paragraph 
(a)(1)(iii)(B) of this section, the requester will be notified in 
accordance with 5 U.S.C. 552(a)(6)(B). In exceptional circumstances, 
when the request cannot be processed within the extended time limit, the 
requester will be so notified and provided an opportunity to limit the 
scope of the request so that it may be processed within such time limit, 
or to arrange an alternative time frame for processing the request or a 
modified request. ``Exceptional'' circumstances will not include delays 
resulting from a predictable workload of requests under this section. 
Unwillingness to make reasonable modifications in the scope of the 
request or to agree to an alternative time frame may be considered as 
factors in determining whether exceptional circumstances exist and 
whether the agency has exercised due diligence in responding to the 
request.
    (D) If the deciding official (as designated by the General Counsel) 
reasonably believes that requests made by a requester, or a group of 
requesters acting in concert, actually constitute a single request that 
would otherwise involve unusual circumstances, as specified in paragraph 
(a)(1)(iii)(B) of this section, and the requests involve clearly related 
matters, those multiple requests may be aggregated.
    (E) If a request is not granted within the time limits set forth in 
paragraphs (a)(1)(iii) (A) and (B) of this section, the request shall be 
deemed to be denied and the requesting party may appeal such denial to 
the General Counsel in accordance with paragraph (a)(2) of this section.
    (iv) Initial determination. (A) The deciding official (as designated 
by the General Counsel) will make reasonable efforts to search, using 
either manual or electronic means, for the requested records in 
electronic form or format, except when such efforts would significantly 
interfere with the operation of the Commission's automated information 
systems. Access will be granted to requested records, or any portions 
thereof, that must be made available under the Freedom of Information 
Act. Access will be denied to records that are exempt under the Freedom 
of Information Act, 5 U.S.C. 552(b), unless the deciding official (as 
designated by the General Counsel) determines that such records fall 
within a category the Commission or the General Counsel has

[[Page 105]]

previously authorized to be made available to the public as a matter of 
policy. Denials will set forth the reasons therefor and advise the 
requester that this determination may be appealed to the General Counsel 
if the requester believes either that the records are not exempt, or 
that the General Counsel should exercise discretion to release such 
records notwithstanding their exempt status. The deciding official (as 
designated by the General Counsel) will also provide a reasonable, good-
faith estimate of the volume of any materials to which access is denied, 
unless providing such an estimate would harm an interest protected by an 
exemption in 5 U.S.C. 552(b) that was cited as a basis for withholding 
materials.
    (B) The deciding official (as designated by the General Counsel) is 
deemed to be the sole official responsible for all denials of initial 
requests, except denials of access to materials contained in active 
investigatory files, in which case the Director or Deputy Director of 
the Bureau or the Director of the Regional Office responsible for the 
investigation will be the responsible official.
    (C) Records to which access has been granted will be made available 
to the requester in any form or format specified by the requester, if 
the records are readily reproducible in that form or format, or can be 
converted to that form or format with a reasonable amount of effort, and 
they will remain available for inspection and copying for a period not 
to exceed 30 days from date of notification to the requester unless the 
requester asks for and receives the consent of the deciding official (as 
designated by the General Counsel) to a longer period. Records assembled 
pursuant to a request will remain available only during this period and 
thereafter will be refiled. Appropriate fees may be imposed for any new 
or renewed request for the same records.
    (D) If a requested record cannot be located from the information 
supplied, or is known to have been destroyed or otherwise disposed of, 
the requester shall be so notified.
    (2) Appeals to the General Counsel from initial denials--(i) Form 
and contents; time of receipt. (A)(1) If an initial request for 
expedited treatment is denied, the requester, at any time before the 
initial determination of the underlying request for records by the 
deciding official (as designated by the General Counsel) (or, if the 
request for expedited treatment was filed with any appeal filed under 
paragraph (a)(2)(i)(A)(2) of this section, at any time before the 
General Counsel's determination on such an appeal), may appeal the 
denial of expedited treatment to the General Counsel.
    (2) If an initial request for records is denied in its entirety, the 
requester may, within 30 days of the date of the determination, appeal 
such denial to the General Counsel. If an initial request is denied in 
part, the time for appeal will not expire until 30 days after the date 
of the letter notifying the requester that all records to which access 
has been granted have been made available.
    (3) The appeal shall be in writing and should include a copy of the 
initial request and a copy of the response to that initial request, if 
any. The appeal shall be addressed as follows: Freedom of Information 
Act Appeal, Office of the General Counsel, Federal Trade Commission, 600 
Pennsylvania Avenue, NW., Washington, DC 20580.
    (B) Failure to mark the envelope and the appeal in accordance with 
paragraph (a)(2)(i)(A) of this section will result in the appeal (and 
any request for expedited treatment filed with that appeal) being 
treated as received on the actual date of receipt by the Office of 
General Counsel.
    (C) Each appeal to the General Counsel which requests him to 
exercise his discretion to release exempt records shall set forth the 
interest of the requester in the subject matter and the purpose for 
which the records will be used if the request is granted.
    (ii) Time limit for appeal. (A)(1) Regarding appeals from initial 
denials of a request for expedited treatment, the General Counsel will 
either grant or deny the appeal expeditiously;
    (2) Regarding appeals from initial denials of a request for records, 
the General Counsel will, within 20 working days of the receipt of such 
an appeal, either grant or deny it, in whole or in part, unless 
expedited treatment has

[[Page 106]]

been granted in accordance with this section, in which case the appeal 
will be processed as soon as practicable.
    (B) The General Counsel may, by written notice to the requester in 
accordance with 5 U.S.C. 552(a)(6)(B), extend the time limit for 
deciding an appeal by not more than 10 working days pursuant to 
paragraph (a)(1)(iii)(B) of this section, provided that the amount of 
any extension utilized during the initial consideration of the request 
under that paragraph will be subtracted from the amount of additional 
time otherwise available. Where exceptional circumstances do not permit 
the processing of the appeal within the extended time limit, the notice 
and procedures set forth in paragraph (a)(1)(iii)(C) of this section 
shall apply.
    (iii) Determination of appeal. (A) The General Counsel has the 
authority to grant or deny all appeals and to release as an exercise of 
discretion records exempt from mandatory disclosure under 5 U.S.C. 
552(b). In unusual or difficult cases, the General Counsel may, in his 
or her sole discretion, refer an appeal to the Commission for 
determination. A denial of an appeal in whole or in part will set forth 
the basis for the denial; will include a reasonable, good-faith estimate 
of the volume of any materials to which access is denied, unless 
providing such an estimate would harm an interest protected by an 
exemption in 5 U.S.C. 552(b) that was cited as a basis for withholding 
materials; and will advise the requester that judicial review of the 
decision is available by civil suit in the district in which the 
requester resides, or has his principal place of business, or in which 
the agency records are situated, or in the District of Columbia.
    (B) The General Counsel shall be deemed solely responsible for all 
denials of appeals, except where an appeal is denied by the Commission. 
In such instances, the Commission shall be deemed solely responsible for 
the denial.
    (b) Requests from congressional committees and subcommittees. 
Requests from congressional committees and subcommittees for nonpublic 
material shall be referred to the General Counsel for presentation to 
the Commission, subject to the provisions in 5 U.S.C. 552(c) and FTC Act 
21(b) that neither the Freedom of Information Act, 5 U.S.C. 552, nor the 
Federal Trade Commission Act, 15 U.S.C. 41, et seq., is authority to 
withhold information from Congress. Upon receipt of a request from a 
congressional committee or subcommittee, notice will be given to the 
submitter of any material marked confidential, or any material within 
the scope of Sec. 4.10(a)(9), that is responsive to the request that 
the request has been received. No other notice need be provided prior to 
granting the request. The Commission will inform the committee or 
subcommittee that the submitter considers such information confidential.
    (c) Requests from Federal and State law enforcement agencies. 
Requests from law enforcement agencies of the Federal and State 
governments for nonpublic records shall be addressed to a liaison 
officer, where the Commission has appointed such an officer, or if there 
is none, to the General Counsel. With respect to requests under this 
paragraph, the General Counsel, the General Counsel's designee, or the 
appropriate liaison officer is delegated the authority to dispose of 
them. Alternatively, the General Counsel may refer such requests to the 
Commission for determination, except that requests must be referred to 
the Commission for determination where the Bureau having the material 
sought and the General Counsel do not agree on the disposition. Prior to 
granting access under this section to any material submitted to the 
Commission, the General Counsel, the General Counsel's designee, or the 
liaison officer will obtain from the requester a certification that such 
information will be maintained in confidence and will be used only for 
official law enforcement purposes. The certificate will also describe 
the nature of the law enforcement activity and the anticipated relevance 
of the information to that activity. A copy of the certificate will be 
forwarded to the submitter of the information at the time the request is 
granted unless the agency requests that the submitter not be notified. 
Requests for material pursuant to compulsory process, or for voluntary 
testimony, in cases or matters in which the Commission is not a

[[Page 107]]

party will be treated in accordance with paragraph (e) of this section.
    (d) Requests from Federal and State agencies for purposes other than 
law enforcement. Requests from Federal and State agencies for access to 
nonpublic records for purposes not related to law enforcement should be 
addressed to the General Counsel. The General Counsel or the General 
Counsel's designee is delegated the authority to dispose of requests 
under this paragraph. Disclosure of nonpublic information will be made 
consistent with sections 6(f) and 21 of the FTC Act. Requests under this 
section shall be subject to the fee and fee waiver provisions of Sec. 
4.8. Requests for material pursuant to compulsory process, or for 
voluntary testimony, in cases or matters in which the Commission is not 
a party will be treated in accordance with paragraph (e) of this 
section.
    (e) Requests for testimony, pursuant to compulsory process or 
otherwise, and requests for material pursuant to compulsory process, in 
cases or matters to which the Commission is not a party. (1) The 
procedures specified in this section will apply to compulsory process 
and requests for voluntary testimony directed to Commission employees, 
except special government employees, that relate in any way to the 
employees' official duties. These procedures will also apply to 
compulsory process and requests for voluntary testimony directed to 
former Commission employees or to current or former special government 
employees of the Commission that seek nonpublic materials or information 
acquired during Commission employment. The provisions of paragraph 
(e)(3) of this section will also apply when requests described above are 
directed to the Commission. For purposes of this section, the term 
testimony includes any written or oral statement by a witness, such as 
depositions, affidavits, declarations, and statements at a hearing or 
trial; the term nonpublic includes any material or information which, 
under Sec. 4.10, is not required to be made public; the term employees, 
except where otherwise specified, includes special government employees 
and other Commission employees; and the term special government 
employees includes consultants and other employees as defined by section 
202 of title 18 of the United States Code.
    (2) Any employee or former employee who is served with compulsory 
process shall promptly advise the General Counsel of its service, the 
nature of the material or information sought, and all relevant facts and 
circumstances. This notification requirement also applies to any 
employee or former employee whose testimony is sought on a voluntary 
basis under the conditions set forth in paragraph (e)(1) of this 
section.
    (3) A party who causes compulsory process to be issued to, or who 
requests testimony by, the Commission or any employee or former employee 
of the Commission shall furnish a statement to the General Counsel, 
unless, with respect to a request by a Federal or State agency, the 
General Counsel determines, as a matter of discretion, to waive this 
requirement. The statement shall set forth the party's interest in the 
case or matter, the relevance of the desired testimony or material, and 
a discussion of whether it is reasonably available from other sources. 
If testimony is desired, the statement shall also contain a general 
summary of the testimony and a discussion of whether Commission records 
could be produced and used in its place. Any authorization for testimony 
will be limited to the scope of the demand as summarized in such 
statement.
    (4) Absent authorization from the General Counsel, the employee or 
former employee shall respectfully decline to produce requested material 
or to disclose requested information. The refusal should be based on 
this paragraph and on United States ex rel. Touhy v. Ragen, 340 U.S. 462 
(1951).
    (5) The General Counsel will consider and act upon compulsory 
process and requests for voluntary testimony under this section with due 
regard for statutory restrictions, the Commission's rules and the public 
interest, taking into account such factors as the need to conserve the 
time of employees for conducting official business; the need to avoid 
spending the time and money of the United States for private purposes; 
the need to maintain impartiality between private litigants in cases 
where a substantial government

[[Page 108]]

interest is not involved; and the established legal standards for 
determining whether justification exists for the disclosure of 
confidential information and material.
    (6) Invitations to testify before Congressional committees or 
subcommittees or to testify before other government bodies on the 
possible effects of legislative and regulatory proposals are not subject 
to paragraphs (e)(1) through (5) of this section.
    (f) Requests by current or former employees to use nonpublic 
memoranda as writing samples shall be addressed to the General Counsel. 
The General Counsel or the General Counsel's designee is delegated the 
authority to dispose of such requests consistent with applicable 
nondisclosure provisions, including sections 6(f) and 21 of the FTC Act.
    (g) Employees are encouraged to engage in teaching, lecturing, and 
writing that is not prohibited by law, Executive order, or regulation. 
However, an employee shall not use information obtained as a result of 
his Government employment, except to the extent that such information 
has been made available to the general public or will be made available 
on request, or when the General Counsel or the General Counsel's 
designee gives written authorization for the use of nonpublic 
information on the basis that the use is in the public interest.
    (h) The General Counsel (or General Counsel's designee) may 
authorize a Commission member, other Commission official, or Commission 
staff to disclose an item or category of information from Commission 
records not currently available to the public for routine inspection and 
copying under Rule 4.9(b) where the General Counsel (or General 
Counsel's designee) determines that such disclosure would facilitate the 
conduct of official agency business and would not otherwise be 
prohibited by applicable law, order, or regulation. Requests for such 
determinations shall be set forth in writing and, in the case of staff 
requests, shall be forwarded to the General Counsel (or General 
Counsel's designee) through the relevant Bureau. In unusual or difficult 
cases, the General Counsel may refer the request to the Commission for 
determination.
    (i) The Director of the Bureau of Competition is authorized, without 
power of redelegation, to respond to access requests for records and 
other materials pursuant to an agreement under the International 
Antitrust Enforcement Assistance Act, 15 U.S.C. 6201 et seq. Before 
responding to such a request, the Bureau Director shall transmit the 
proposed response to the Secretary and the Secretary shall notify the 
Commission of the proposed response. If no Commissioner objects within 
three days following the Commission's receipt of such notification, the 
Secretary shall inform the Bureau Director that he or she may proceed.

(15 U.S.C. 41 et seq.)

[40 FR 7629, Feb. 21, 1975, as amended at 42 FR 13820, Mar. 14, 1977; 43 
FR 5802, Feb. 10, 1978; 46 FR 26292, May 12, 1981; 48 FR 4280, Jan. 31, 
1983; 49 FR 20279, May 14, 1984; 49 FR 21048, May 18, 1984; 50 FR 53306, 
Dec. 31, 1985; 55 FR 29839, July 23, 1990; 57 FR 10807, Mar. 31, 1992; 
58 FR 15764, Mar. 24, 1993; 60 FR 37750, July 21, 1995; 63 FR 32978, 
June 17, 1998; 63 FR 45647, Aug. 26, 1998; 64 FR 3013, Jan. 20, 1999; 64 
FR 32180, June 16, 1999; 64 FR 35256, June 30, 1999; 65 FR 67259, Nov. 
9, 2000; 66 FR 64144, Dec. 12, 2001]



Sec. 4.12  Disposition of documents submitted to the Commission.

    (a) Material submitted to the Commission. (1) Any person who has 
submitted material to the Commission may obtain, on request, the return 
of material submitted to the Commission which has not been received into 
evidence:
    (i) After the close of the proceeding in connection with which the 
material was submitted; or
    (ii) When no proceeding in which the material may be used has been 
commenced within a reasonable time after completion of the examination 
and analysis of all such material and other information assembled in the 
course of the investigation.
    (2) Such request shall be in writing, addressed to the custodian 
designated pursuant to Sec. 2.16 or the Secretary of the Commission in 
all other circumstances, and shall reasonably describe the material 
requested. A request for return of material may be filed at any time, 
but material will not be returned nor will commitments to

[[Page 109]]

return material be undertaken prior to the time described in this 
paragraph.
    (b) Commission-made copies of documents submitted to the Commission. 
The Commission will not return to the submitter copies of documents made 
by the Commission unless, upon a showing of extraordinary circumstances, 
the Commission determines that return would be required in the public 
interest.
    (c) Disposition of material not returned. Subsequent to the time 
prescribed in paragraph (a) of this section, the staff will examine all 
submitted material and Commission-made copies of documents located in a 
reasonable search of the Commission's files and will determine, 
consistent with the Federal Records Act, 44 U.S.C. 3301, which materials 
are appropriate for preservation as evidence of the organization, 
functions, policies, decisions, procedures, operations, or other 
activities of the Commission or because of the information value of data 
in them. The Commission will dispose of all material determined not to 
be appropriate for preservation in accordance with applicable 
regulations of the National Archives and Records Administration.

[46 FR 26292, May 12, 1981, as amended at 60 FR 37751, July 21, 1995]



Sec. 4.13  Privacy Act rules.

    (a) Purpose and scope. (1) This section is promulgated to implement 
the Privacy Act of 1974 (Pub. L. 93-579, 5 U.S.C. 552a) by establishing 
procedures whereby an individual can, as to all systems of records 
maintained by the Commission except those set forth in Sec. 4.13(m) as 
exempt from disclosure, (i) Request notification of whether the 
Commission maintains a record pertaining to him in any system of rec 
ords, (ii) request access to such a rec ord or to an accounting of its 
disclosure, (iii) request that the record be amended or corrected, and 
(iv) appeal an initial adverse determination of any such request. This 
section also establishes those systems of records that are specifically 
exempt from disclosure and from other requirements.
    (2) The procedures of this section apply only to requests by an 
individual as defined in Sec. 4.13(b). Except as otherwise provided, 
they govern only rec ords containing personal information in systems of 
records for which notice has been published by the Commission in the 
Federal Register pursuant to section 552a(e)(4) of the Privacy Act of 
1974 and which are neither exempt from the provisions of this section 
nor contained in government-wide systems of personnel records for which 
notice has been published in the Federal Register by the Office of 
Personnel Management. Requests for notification, access, and amendment 
of personnel records which are contained in a system of records for 
which notice has been given by the Office of Personnel Management are 
governed by the Office of Personnel Management's notices, 5 CFR part 
297. Access to rec ords which are not subject to the requirements of the 
Privacy Act are governed by Sec. Sec. 4.8 through 4.11.
    (b) Definitions. The following definitions apply to this section 
only:
    (1) Individual means a natural person who is a citizen of the United 
States or an alien lawfully admitted for permanent residence.
    (2) Record means any item, collection, or grouping of personal 
information about an individual that is maintained by the Commission, 
including, but not limited to, his education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or the identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph, but does not include information concerning 
proprietorships, businesses, or corporations.
    (3) System of records means a group of any records under the control 
of the Commission from which information is retrieved by the name of the 
individual or by some identifying number, symbol, or other identifying 
particular assigned to the individual, for which notice has been 
published by the Commission in the Federal Register pursuant to 5 U.S.C. 
552a(e)(4).
    (c) Procedures for requests pertaining to individual records in a 
record system. An individual may request access to his or her records or 
any information pertaining to that individual in a system of records, 
and notification of whether

[[Page 110]]

and to whom the Commission has disclosed a record for which an 
accounting of disclosures is required to be kept and made available to 
the individual, using the procedures of this section. Requests for the 
disclosure of records under this section or to determine whether a 
system of records contains records pertaining to an individual or to 
obtain an accounting of disclosures, shall be in writing and if mailed, 
addressed as follows:

Privacy Act Request, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.


If requests are presented in person at the Office of the General 
Counsel, the individual shall be required to execute a written request. 
All requests shall name the system of records that is the subject of the 
request, and shall include any additional information specified in the 
pertinent system notice as necessary to locate the records requested. If 
the requester wants another person to accompany him or her to review the 
records, the request shall so state. Nothing in this section will allow 
an individual access to any information compiled in reasonable 
anticipation of a civil action or proceeding.
    (d) Times, places, and requirements for identification of 
individuals making requests. Verification of identity of persons making 
written requests to the deciding official (as designated by the General 
Counsel) ordinarily will not be required. The signature on such requests 
will be deemed a certification by the signatory that he or she is the 
individual to whom the record pertains or is the parent or guardian of a 
minor or the legal guardian of the individual to whom the record 
pertains. The deciding official (as designated by the General Counsel) 
may require additional verification of a requester's identity when such 
information is reasonably necessary to assure that records are not 
improperly disclosed; provided, however, that no verification of 
identity will be required if the records sought are publicly available 
under the Freedom of Information Act.
    (e) Disclosure of requested information to individuals. Within 10 
working days of receipt of a request under Sec. 4.13(c), the deciding 
official (as designated by the General Counsel) will acknowledge receipt 
of the request. Within 30 working days of the receipt of a request under 
Sec. 4.13(c), the deciding official (as designated by the General 
Counsel) will inform the requester whether a system of records 
containing retrievable information pertaining to the requester exists, 
and if so, either that the request has been granted or that the 
requested records or information is exempt from disclosure pursuant to 
Sec. 4.13(m). When, for good cause shown, the deciding official (as 
designated by the General Counsel) is unable to respond within 30 
working days of the receipt of the request, that official will notify 
the requester and inform him or her approximately when a response will 
be made.
    (f) Special procedures: Medical records. When the deciding official 
(as designated by the General Counsel) determines that disclosure of a 
medical or psychological record directly to a requesting individual 
could have an adverse effect on the individual, he or she will require 
the individual to designate a medical doctor to whom the record will be 
transmitted.
    (g) Request for correction or amendment of record. An individual to 
whom access to his records or any information pertaining to him in a 
system of records has been granted may request that any portion thereof 
be amended or corrected because he believes it is not accurate, 
relevant, timely, or complete. An initial request for correction or 
amendment of a record shall be in writing whether presented in person or 
by mail, and if by mail, addressed as in Sec. 4.13(c). In making a 
request under this subsection, the requesting party shall state the 
nature of the information in the record the individual believes to be 
inaccurate, irrelevant, untimely, or incomplete, the correction or 
amendment desired, and the reasons therefore.
    (h) Agency review of request for correction or amendment of record. 
Whether presented in person or by mail, requests under Sec. 4.13(g) 
will be acknowledged by the deciding official (as designated by the 
General Counsel) within 10 working days of the receipt of the request if 
action on the request cannot

[[Page 111]]

be completed and the individual notified of the results within that 
time. Thereafter, the deciding official (as designated by the General 
Counsel) will promptly either make the requested amendment or correction 
or inform the requester of his refusal to make the amendment or 
correction, the reasons for the refusal, and the requester's right to 
appeal that refusal in accordance with Sec. 4.13(i).
    (i) Appeal of initial adverse agency determination. (1) If an 
initial request filed under Sec. 4.13(c) or Sec. 4.13(g) is denied, 
the requester may appeal that denial to the General Counsel. The appeal 
shall be in writing and addressed as follows:

Privacy Act Appeal, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.


Within 30 working days of the receipt of the appeal, the General Counsel 
will notify the requester of the disposition of that appeal, except that 
the General Counsel may extend the 30-day period for good cause, in 
which case, the General Counsel will advise the requester of the 
approximate date on which review will be completed. In unusual or 
difficult cases, the General Counsel may, in his or her sole discretion, 
refer an appeal to the Commission for determination.
    (2)(i) If the General Counsel refuses to amend or correct the record 
in accordance with a request under Sec. 4.13(g), the General Counsel 
will notify the requester of that decision and inform the requester of 
the right to file with the deciding official (as designated by the 
General Counsel) a concise statement setting forth the reasons for the 
requester's disagreement with the General Counsel's determination and 
the fact that the requester's statement will be treated as set forth in 
paragraph (i)(2)(ii) of this section. The General Counsel will also 
inform the requester that judicial review of the decision is available 
by a civil suit in the district in which the requester resides, or has 
his principal place of business, or in which the agency records are 
situated, or in the District of Columbia.
    (ii) If the individual files a statement disagreeing with the 
General Counsel's determination not to amend or correct a record, such 
disagreement will be clearly noted in the record involved and the 
individual's statement will be made available to anyone to whom the 
record has been disclosed after September 27, 1975, or is subsequently 
disclosed together with, if the General Counsel deems it appropriate, a 
brief statement of his or her reasons for declining to amend the record.
    (j) Disclosure of record to person other than the individual to whom 
it pertains. Except as provided by 5 U.S.C. 552a(b), the written request 
or prior written consent of the individual to whom a record pertains, or 
of his parent if a minor, or legal guardian if incompetent, shall be 
required before such record is disclosed. If the individual elects to 
inspect a record in person and desires to be accompanied by another 
person, the deciding official (as designated by the General Counsel) may 
require the individual to furnish a signed statement authorizing 
disclosure of his or her record in the presence of the accompanying 
named person.
    (k) Fees. No fees will be charged for searching for a record, 
reviewing it, or for copies of records made by the Commission for its 
own purposes incident to granting access to a requester. Copies of 
records to which access has been granted under this section may be 
obtained by the requester from the deciding official (as designated by 
the General Counsel) on payment of the reproduction fees provided in 
Sec. 4.8(b)(6).
    (l) Penalties. Section 552a(i)(3) of the Privacy Act, 5 U.S.C. 
552a(i)(3), makes it a misdemeanor, subject to a maximum fine of $5,000, 
to knowingly and willfully request or obtain any record concerning an 
individual under false pretenses. Sections 552a(i) (1) and (2) of the 
Privacy Act, 5 U.S.C. 552a(i) (1) and (2), provide penalties for 
violations by agency employees of the Privacy Act or regulations 
established thereunder. Title 18 U.S.C. 1001, Crimes and Criminal 
Procedures, makes it a criminal offense, subject to a maximum fine of 
$10,000 or imprisonment for not more than 5 years or both, to knowingly 
and willfully make or cause to be made any false or fraudulent 
statements or representations in any matter within the

[[Page 112]]

jurisdiction of any agency of the United States.
    (m) Specific exemptions. (1) Pursuant to 5 U.S.C. 552a(j)(2), 
investigatory materials maintained by an agency component in connection 
with any activity relating to criminal law enforcement in the following 
systems of records are exempt from all subsections of 5 U.S.C. 552a, 
except (b), (c) (1) and (2), (e)(4) (A) through (F), (e) (6), (7), (9), 
(10), and (11), and (i), and from the provisions of this section, except 
as otherwise provided in 5 U.S.C. 552a(j)(2):

Office of Inspector General Investigative Files--FTC

    (2) Pursuant to 5 U.S.C. 552a(k)(2), investigatory materials 
compiled for law enforcement purposes in the following systems of 
records are exempt from subsections (c)(3), (d), (e)(1), (e)(4)(G), (H), 
and (I), and (f) of 5 U.S.C. 552a, and from the provisions of this 
section, except as otherwise provided in 5 U.S.C. 552a(k)(2):

Investigational, Legal, and Public Records--FTC
Disciplinary Action Investigatory Files--FTC
Clearance to Participate Applications and the Commission's Responses 
Thereto, and Related Documents--FTC
Management Information System--FTC
Office of the Secretary Control and Reporting System--FTC
Office of Inspector General Investigative Files--FTC
Stenographic Reporting Service Requests--FTC
Identity Theft Complaint Management System--FTC
Freedom of Information Act Requests and Appeals--FTC
Privacy Act Requests and Appeals--FTC
Information Retrieval and Indexing System--FTC

    (3) Pursuant to 5 U.S.C. 552a(k)(5), investigatory materials 
compiled to determine suitability, eligibility, or qualifications for 
Federal civilian employment, military service, Federal contracts, or 
access to classified information, but only where disclosure would reveal 
the identity of a confidential source of information, in the following 
systems of records are exempt from subsections (c)(3), (d), (e)(1), 
(e)(4) (G), (H), and (I), and (f) of 5 U.S.C. 552a, and from the 
provisions of this section, except as otherwise provided in 5 U.S.C. 
552a(k)(5):

Personnel Security File--FTC

[40 FR 40780, Sept. 3, 1975, as amended at 46 FR 26292, May 12, 1981; 48 
FR 4280, Jan. 31, 1983; 55 FR 37700, Sept. 13, 1990; 55 FR 38801, Sept. 
21, 1990; 57 FR 10808, Mar. 31, 1992; 58 FR 7047, Feb. 4, 1993; 63 FR 
45648, Aug. 26, 1998; 64 FR 3014, Jan. 20, 1999; 64 FR 69397, Dec. 13, 
1999; 66 FR 64144, Dec. 12, 2001; 67 FR 123, Jan. 2, 2002]



Sec. 4.14  Conduct of business.

    (a) Matters before the Commission for consideration may be resolved 
either at a meeting under Sec. 4.15 or by written circulation. Any 
Commissioner may direct that a matter presented for consideration be 
placed on the agenda of a Commission meeting.
    (b) Quorum. A majority of the members of the Commission, constitutes 
a quorum for the transaction of business.
    (c) Any Commission action, either at a meeting or by written 
circulation, may be taken only with the affirmative concurrence of a 
majority of the participating Commissioners, except where a greater 
majority is required by statute or rule or where the action is taken 
pursuant to a valid delegation of authority. No Commissioner may 
delegate the authority to determine his or her vote in any matter 
requiring Commission action, but authority to report a Commissioner's 
vote on a particular matter resolved either by written circulation, or 
at a meeting held in the Commissioner's absence, may be vested in a 
member of the Commissioner's staff.

[42 FR 13540, Mar. 11, 1977, as amended at 50 FR 53306, Dec. 31, 1985]



Sec. 4.15  Commission meetings.

    (a) In general. (1) Meetings of the Commission, as defined in 5 
U.S.C. 552b(a)(2), are held at the principal office of the Commission, 
unless otherwise directed.
    (2) Initial announcements of meetings. For each meeting, the 
Commission shall announce:
    (i) The time, place and subject matter of the meeting,
    (ii) Whether the meeting will be open or closed to the public, and

[[Page 113]]

    (iii) The name and phone number of the official who will respond to 
requests for information about the meeting.

Such announcement shall be made at least one week before the meeting 
except that where the agency determines pursuant to 5 U.S.C. 552b(e)(1) 
to call the meeting on less than one week's notice, or where the agency 
determines to close the meeting pursuant to paragraph (c)(2) of this 
section, the announcement shall be made at the earliest practicable 
time.
    (3) Announcements of changes in meetings. Following the announcement 
of a meeting, any change in the time, place or subject matter will be 
announced at the earliest practicable time, and, except with respect to 
meetings closed under paragraph (c)(2) of this section, any change in 
the subject matter or decision to open or close a meeting shall be made 
only as provided in 5 U.S.C. 552b(e)(2).
    (4) Deletions from announcements. The requirements of paragraphs 
(a)(2) and (a)(3) of this section do not require the disclosure of any 
information pertaining to a portion of a closed meeting where such 
disclosure is likely to concern a matter within the scope of 5 U.S.C. 
552b(c).
    (5) Dissemination of notices. Notices required under paragraphs 
(a)(2) and (a)(3) of this section will be posted at the principal office 
of the Commission, recorded on a telephone message device, and, except 
as to notices of meetings closed under paragraph (c)(2) of this section, 
submitted to the Federal Register for publication. In addition, notices 
issued under paragraph (a)(2) of this section one week in advance of the 
meeting will be sent to all persons and organizations who have requested 
inclusion on a meeting notice mailing list, and will be issued as a 
press release to interested media.
    (b) Open meetings. (1) Commission meetings shall be open to public 
observation unless the Commission determines that portions may be closed 
pursuant to 5 U.S.C. 552b(c).
    (2) Any person whose interest may be directly affected if a portion 
of a meeting is open, may request that the Commission close that portion 
for any of the reasons described in 5 U.S.C. 552b(c). The Commission 
shall vote on such requests if at least one member desires to do so. 
Such requests shall be in writing, filed at the earliest practicable 
time, and describe how the matters to be discussed will have any of the 
effects enumerated in 5 U.S.C. 552b(c). Requests shall be addressed as 
follows:

Closed Meeting Request, Office of the General Counsel, Federal Trade 
Commission, 6th Street and Pennsylvania Avenue NW., Washington, DC 
20580.

    (3) The Commissioner to whom a matter has been assigned for 
presentation to the Commission shall have the authority to make 
available to the public, prior to consideration of that matter at an 
open meeting, material sufficient to inform the public of the issues 
likely to be discussed in connection with that matter.
    (c) Closed meetings. (1) Whenever the Commission votes to close a 
meeting or series of meetings under these rules, it shall make publicly 
available within one day notices both of such vote and the General 
Counsel's determination regarding certification under 5 U.S.C. 
552b(f)(1). Such determination by the General Counsel shall be made 
prior to the Commission vote to close a meeting or series of meetings. 
Further, except with respect to meetings closed under paragraph (c)(2) 
of this section, the Commission shall make publicly available within one 
day a full written explanation of its action in closing any meeting, and 
a list specifying the names and affiliations of all persons expected to 
attend, except Commission employees and consultants and any stenographer 
or court reporter attending for the sole purpose of preparing a verbatim 
transcript. All Commission employees and consultants may attend 
nonadjudicative portions of any closed meeting and members of 
Commissioners' personal staffs, the General Counsel and his staff, and 
the Secretary and his staff may attend the adjudicative portions of any 
closed meeting except to the extent the notice of a particular closed 
meeting otherwise specifically provides. Stenographers or court 
reporters may attend any closed meeting at which their services are 
required by the Commission.

[[Page 114]]

    (2) If a Commission meeting, or portions thereof, may be closed 
pursuant to 5 U.S.C. 552b(c)(10), the Commission may, by vote recorded 
at the beginning of the meeting, or portion thereof, close the portion 
or portions of the meeting so exempt.
    (3) Closed meeting transcripts or minutes required by 5 U.S.C. 
552b(f)(1) will be released to the public insofar as they contain 
information that either is not exempt from disclosure under 5 U.S.C. 
552b(c), or, although exempt, should be disclosed in the public 
interest. The Commission will determine whether to release, in whole or 
in part, the minutes of its executive sessions to consider oral 
arguments. With regard to all other closed meetings, the General Counsel 
or the General Counsel's designee shall determine, in accordance with 
Sec. 4.9(c), which portions of the transcripts or minutes may be 
released.
    (d) The presiding officer shall be responsible for preserving order 
and decorum at meetings and shall have all powers necessary to that end.

[42 FR 13541, Mar. 11, 1977; 42 FR 15409, Mar. 22, 1977, as amended at 
42 FR 62912, Dec. 14, 1977: 43 FR 1937, Jan. 13, 1978; 43 FR 35684, Aug. 
11, 1978; 63 FR 32978, June 17, 1998]



Sec. 4.16  Privilege against self-incrimination.

    Section 2.11 of Pub. L. 91-462 specifically repeals paragraph 7 of 
section 9 of the Federal Trade Commission Act. Title 18, section 6002, 
of the United States Code provides that whenever a witness refuses, on 
the basis of his privilege against self-incrimination, to testify or 
provide other information in a proceeding before or ancillary to:
    (a) A court or grand jury of the United States,
    (b) An agency of the United States, or
    (c) Either House of Congress, a joint committee of the two Houses, 
or a committee or a subcommittee of either House, and the person 
presiding over the proceeding communicates to the witness an order 
issued under section 6004, the witness may not refuse to comply with the 
order on the basis of his privilege against self-incrimination; but no 
testimony or other information compelled under the order (or any 
information directly or indirectly derived from such testimony or other 
information) may be used against the witness in any criminal case, 
except a prosecution for perjury, giving a false statement, or otherwise 
failing to comply with the order. Title 18, section 6004, of the United 
States Code provides that: (1) In the case of any individual who has 
been or who may be called to testify or provide other information at any 
proceeding before an agency of the United States, the agency may, with 
the approval of the Attorney General, issue, in accordance with 
subsection (b) of section 6004, an order requiring the individual to 
give testimony or provide other information which he refused to give or 
provide on the basis of his privilege against self-incrimination, such 
order to become effective as provided in title 18, section 6002, of the 
United States Code; (2) an agency of the United States may issue an 
order under subsection (a) of section 6004 only if in its judgment (i) 
the testimony or other information from such individual may be necessary 
to the public interest; and (ii) such individual has refused or is 
likely to refuse to testify or provide other information on the basis of 
his privilege against self-incrimination.

(18 U.S.C. 6002, 6004)

[37 FR 5017, Mar. 9, 1972. Redesignated at 45 FR 36345, May 29, 1980]



Sec. 4.17  Disqualification of Commissioners.

    (a) Applicability. This section applies to all motions seeking the 
disqualification of a Commissioner from any adjudicative or rulemaking 
proceeding.
    (b) Procedures. (1) Whenever any participant in a proceeding shall 
deem a Commissioner for any reason to be disqualified from participation 
in that proceeding, such participant may file with the Secretary a 
motion to the Commission to disqualify the Commissioner, such motion to 
be supported by affidavits and other information setting forth with 
particularity the alleged grounds for disqualification.
    (2) Such motion shall be filed at the earliest practicable time 
after the participant learns, or could reasonably have learned, of the 
alleged grounds for disqualification.

[[Page 115]]

    (3)(i) Such motion shall be addressed in the first instance by the 
Commissioner whose disqualification is sought.
    (ii) In the event such Commissioner declines to recuse himself or 
herself from further participation in the proceeding, the Commission 
shall determine the motion without the participation of such 
Commissioner.
    (c) Standards. Such motion shall be determined in accordance with 
legal standards applicable to the proceeding in which such motion is 
filed.

(15 U.S.C. 46(g))

[46 FR 45750, Sept. 15, 1981]



PART 5_STANDARDS OF CONDUCT--Table of Contents




Subpart A_Employee Conduct Standards and Financial Conflicts of Interest

Sec.
5.1 Cross-reference to executive branch-wide regulations.
5.2 Exemption of insubstantial financial conflicts.

               Subpart B_Financial Disclosure Requirements

5.10 Cross-reference to executive branch-wide regulations.

Subparts C-D [Reserved]

  Subpart E_Disciplinary Actions Concerning Postemployment Conflict of 
                                Interest

5.51 Scope and applicability.
5.52 Nonpublic proceedings.
5.53 Initiation of investigation.
5.54 Referral to the Office of Government Ethics and to the Department 
          of Justice.
5.55 Conduct of investigation.
5.56 Disposition.
5.57 Order to show cause.
5.58 Answer and request for a hearing.
5.59 Presiding official.
5.60 Scheduling of hearing.
5.61 Prehearing procedures; motions; interlocutory appeals; summary 
          decision; discovery; compulsory process.
5.62 Hearing rights of respondent.
5.63 Evidence; transcript; in camera orders; proposed findings of fact 
          and conclusions of law.
5.64 Initial decision.
5.65 Review of initial decision.
5.66 Commission decision and reconsideration.
5.67 Sanctions.
5.68 Judicial review.

    Authority: 5 U.S.C. 7301; 5 U.S.C. App. (Ethics in Government Act of 
1978); 15 U.S.C. 46(g); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 
215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 
5 CFR part 2635, unless otherwise noted.

    Source: 32 FR 13272, Sept. 20, 1967, unless otherwise noted. 
Redesignated at 41 FR 54483, Dec. 14, 1976.



Subpart A_Employee Conduct Standards and Financial Conflicts of Interest



Sec. 5.1  Cross-reference to executive branch-wide regulations.

    Commissioners and employees, including special government employees, 
of the Federal Trade Commission (FTC) are subject to and should refer to 
the ``Standards of Ethical Conduct for Employees of the Executive 
Branch'' at 5 CFR part 2635 (``executive branch-wide Standards of 
Conduct'') and to the FTC regulations at 5 CFR 5701 that supplement the 
executive branch-wide Standards of Conduct.

[58 FR 15764, Mar. 24, 1993, as amended at 64 FR 42594, Aug. 5, 1999]



Sec. 5.2  Exemption of insubstantial financial conflicts.

    (a) An employee or special Government employee will not be subject 
to remedial or disciplinary action or to criminal prosecution under 18 
U.S.C. 208(a), if he makes a full disclosure in writing to the official 
responsible for his appointment of the nature and circumstances of the 
particular matter involved and of his conflicting financial interest 
relating thereto, and receives in advance a written determination made 
by such official that the interest is not so substantial as to be deemed 
likely to affect the integrity of the services which the Government may 
expect from the employee or special Government employee.
    (b) For the purposes of paragraph (a) of this section, the 
``official responsible for appointment'' shall be the Executive Director 
in all cases where the employee is classified at grade GS-15 or below, 
or at a comparable pay level, except that each Commissioner shall be the 
``official responsible for appointment'' of advisors in the 
Commissioner's immediate office.

[[Page 116]]

    (c) In all other cases, the Chairman shall be the ``official 
responsible for appointment.''
    (d) Pursuant to 5 CFR part 2640, certain financial interests are 
exempted from the provisions of 18 U.S.C. 208(a) as being too remote too 
inconsequential to affect the integrity of an employee's services.

[58 FR 15764, Mar. 24, 1993, as amended at 63 FR 35130, June 29, 1998]



               Subpart B_Financial Disclosure Requirements



Sec. 5.10  Cross-reference to executive branch-wide regulations.

    Commissioners and employees, including special government employees, 
of the Federal Trade Commission are subject to and should refer to the 
executive branch-wide financial disclosure regulations at 5 CFR part 
2634, and to the procedures for filing and review of financial 
disclosure reports found in Chapter 3 of the FTC Administrative Manual.

[58 FR 15765, Mar. 24, 1993]

Subparts C-D [Reserved]



  Subpart E_Disciplinary Actions Concerning Postemployment Conflict of 
                                Interest

    Authority: 15 U.S.C. 41 et seq.

    Source: 46 FR 26050, May 11, 1981, unless otherwise noted.



Sec. 5.51  Scope and applicability.

    These regulations establish procedures for investigating and 
determining alleged violations of 18 U.S.C. 207 (postemployment 
restrictions applicable to federal employees) or regulations issued by 
the Office of Government Ethics, set forth in 5 CFR parts 2637 and 2641, 
reflecting the views of the Office of Government Ethics and the 
Department of Justice as to the requirements of 18 U.S.C. 207.

[58 FR 15765, Mar. 24, 1993]



Sec. 5.52  Nonpublic proceedings.

    Any investigation or proceedings held under this part shall be 
nonpublic unless the respondent specifically requests otherwise, except 
to the extent required by the Freedom of Information Act (5 U.S.C. 552) 
or by the Sunshine Act (5 U.S.C. 552b). However, the presiding 
official's initial decision and any final decision of the Commission 
shall be placed on the public record, except that information may be 
designated in camera in accordance with Sec. 3.45 of the Commission's 
Rules of Practice.



Sec. 5.53  Initiation of investigation.

    (a) Investigations under this part may be initiated upon the 
submission by any person of a written statement to the Secretary setting 
forth sufficient information to indicate a possible violation of 18 
U.S.C. 207 or by the Commission on its own initiative when a possible 
violation is indicated by information within the Commission's 
possession.
    (b) At the direction of the Commission, the General Counsel shall 
investigate any alleged violation of 18 U.S.C. 207.



Sec. 5.54  Referral to the Office of Government Ethics and to the 
Department of Justice.

    (a) The General Counsel shall make a preliminary determination of 
whether the matter appears frivolous and, if not, shall expeditiously 
transmit any available information to the Director of the Office of 
Government Ethics and to the Criminal Division, Department of Justice.
    (b) Unless the Department of Justice communicates to the Commission 
that it does not intend to initiate criminal prosecution, the General 
Counsel shall coordinate any investigation or proceeding under this part 
with the Department of Justice in order to avoid prejudicing criminal 
proceedings.



Sec. 5.55  Conduct of investigation.

    (a) The General Counsel may (1) exercise the authority granted in 
Sec. 2.5 of the Commission's Rules of Practice to administer oaths and 
affirmations; and (2) conduct investigational hearings pursuant to part 
2 of these rules. He

[[Page 117]]

may also recommend that the Commission issue compulsory process in 
connection with an investigation under this section.
    (b) Witnesses in investigations shall have the rights set forth in 
Sec. 2.9 of the Commission's Rules of Practice.



Sec. 5.56  Disposition.

    (a) Upon the conclusion of an investigation under this part, the 
General Counsel shall forward to the Commission a summary of the facts 
disclosed by the investigation along with a recommendation as to whether 
the Commission should issue an order to show cause pursuant to Sec. 
5.57.
    (b) When the former government employee involved is an attorney, the 
General Counsel shall also recommend whether the matter should be 
referred to the disciplinary committee of the bar(s) of which the 
attorney is a member.



Sec. 5.57  Order to show cause.

    (a) Upon a Commission determination that there exists reasonable 
cause to believe a former government employee has violated 18 U.S.C. 
207, the Commission may issue an order requiring the former employee to 
show cause why sanctions should not be imposed.
    (b) The show cause order shall contain:
    (1) The statutory provisions alleged to have been violated and a 
clear and concise description of the acts of the former employee that 
are alleged to constitute the violation;
    (2) Notice of the respondent's right to submit an answer and request 
a hearing, and the time and manner in which the request is to be made; 
and
    (3) A statement of the sanctions that may be imposed pursuant to 
Sec. 5.67 of this part.
    (c) Subsequent to the issuance of an order to show cause, any 
communications to or from the Commission or any member of the Commission 
shall be governed by the ex parte provisions of Sec. 4.7 of the 
Commission's Rules of Practice. 16 CFR 4.7.



Sec. 5.58  Answer and request for a hearing.

    (a) An answer and request for a hearing must be filed with the 
Secretary of the Commission within thirty (30) days after service of the 
order to show cause.
    (b) In the absence of good cause shown, failure to file an answer 
and request for a hearing within the specified time limit:
    (1) Will be deemed a waiver of the respondent's right to contest the 
allegations of the show cause order or request a hearing and
    (2) Shall authorize the Commission to find the facts to be as 
alleged in the show cause order and enter a final decision providing for 
the imposition of such sanctions specified in Sec. 5.67 as the 
Commission deems appropriate.
    (c) An answer shall contain (1) a concise statement of the facts or 
law constituting each ground of defense and (2) specific admission, 
denial, or explanation of each fact alleged in the show cause order or, 
if the respondent is without knowledge thereof, a statement to that 
effect. Any allegations of a complaint not answered in this manner will 
be deemed admitted.
    (d) Hearings shall be deemed waived as to any facts in the show 
cause order that are specifically admitted or deemed to be admitted as a 
result of respondent's failure to deny them. Those portions of 
respondent's answer, together with the show cause order, will provide a 
record basis for initial decision by the Administrative Law Judge or for 
final decision by the Commission.
    (e) If all material factual allegations of the show cause order are 
specifically admitted or have been deemed admitted in accordance with 
paragraph (c) of this section, the Commission will decide the matter on 
the basis of the allegations set forth in the show cause order and 
respondent's answer.



Sec. 5.59  Presiding official.

    (a) Upon the receipt of an answer and request for a hearing, the 
Secretary shall refer the matter to the Chief Administrative Law Judge, 
who shall appoint an Administrative Law Judge to preside over the 
hearing and shall notify the respondent and the General Counsel as to 
the person selected.
    (b) The powers and duties of the presiding official shall be as set 
forth in

[[Page 118]]

Sec. 3.42(b) through (h) of the Commission's Rules of Practice.



Sec. 5.60  Scheduling of hearing.

    The presiding official shall fix the date, time and place of the 
hearing. The hearing shall not be scheduled earlier than fifteen days 
after receipt of the respondent's answer and request for a hearing. In 
fixing the time, date and place of the hearing, the presiding official 
shall give due regard to the respondent's need for adequate time to 
prepare a defense and an expeditious resolution of allegations that may 
be damaging to his or her reputation.



Sec. 5.61  Prehearing procedures; motions; interlocutory appeals; 
summary decision; discovery; compulsory process.

    Because of the nature of the issues involved in proceedings under 
this part, the Commission anticipates that extensive motions, prehearing 
proceedings and discovery will not be required in most cases. For this 
reason, detailed procedures will not be established under this part. 
However, to the extent deemed warranted by the presiding official, 
prehearing conferences, motions, interlocutory appeals, summary 
decisions, discovery and compulsory process shall be permitted and shall 
be governed, where appropriate, by the provisions set forth in subparts 
C and D, part 3, of the Commission's Rules of Practice.



Sec. 5.62  Hearing rights of respondent.

    In any hearing under this subpart, the respondent shall have the 
right:
    (a) To be represented by counsel;
    (b) To present and cross-examine witnesses and submit evidence;
    (c) To present objections, motions, and arguments, oral or written; 
and
    (d) To obtain a transcript of the proceedings on request.



Sec. 5.63  Evidence; transcript; in camera orders; proposed findings 
of fact and conclusions of law.

    Sections 3.43, 3.44, 3.45, and 3.46 of the Commission's Rules of 
Practice shall govern, respectively, the receipt and objections to 
admissibility of evidence, the transcript of the hearing, in camera 
orders and the submission and consideration of proposed findings of fact 
and conclusions of law except that (a) a copy of the hearing transcript 
shall be provided the respondent; and (b) the Commission has the burden 
of establishing, by a preponderance of the evidence on the record as a 
whole, the allegations stated in the order to show cause.



Sec. 5.64  Initial decision.

    Section 3.51 of the Commission's Rules of Practice shall govern the 
initial decision in proceedings under this subpart, except that the 
determination of the Administrative Law Judge must be supported by a 
preponderance of the evidence.



Sec. 5.65  Review of initial decision.

    Appeals from the initial decision of the Administrative Law Judge or 
review by the Commission in the absence of an appeal shall be governed 
by Sec. Sec. 3.52 and 3.53 of the Commission's Rules of Practice except 
that oral arguments shall be nonpublic subject to the exceptions stated 
in Sec. 3.52 of this part.



Sec. 5.66  Commission decision and reconsideration.

    The Commission's decision and any reconsideration or reopening of 
the proceeding shall be governed by Sec. Sec. 2.51, 3.54, 3.55, 3.71 
and 3.72 of the Commission's Rules of Practice, except that (a) if the 
initial decision is modified or reversed, the Commission shall specify 
such findings of fact and conclusions of law as are different from those 
of the presiding official; and (b) references therein to ``court of 
appeals'' shall be deemed for purposes of proceedings under this part to 
refer to ``district court.''



Sec. 5.67  Sanctions.

    In the case of any respondent who fails to request a hearing after 
receiving adequate notice of the allegations pursuant to Sec. 5.57 or 
who is found in the Commission's final decision to have violated 18 
U.S.C. 207 (a), (b), or (c), the Commission may order such disciplinary 
action as it deems warranted, including:
    (a) Reprimand;

[[Page 119]]

    (b) Suspension from participating in a particular matter or matters 
before the Commission; or
    (c) Prohibiting the respondent from making, with the intent to 
influence, any formal or informal appearance before, or any oral or 
written communication to, the Commission or its staff on any matter or 
business on behalf of any other person (except the United States) for a 
period not to exceed five (5) years.



Sec. 5.68  Judicial review.

    A respondent against whom the Commission has issued an order 
imposing disciplinary action under this part may seek judicial review of 
the Commission's determination in an appropriate United States District 
Court by filing a petition for such review within sixty (60) days of 
receipt of notice of the Commission's final decision.



PART 6_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN 

PROGRAMS OR ACTIVITIES CONDUCTED BY THE FEDERAL TRADE COMMISSION
--Table of Contents




Sec.
6.101 Purpose.
6.102 Application.
6.103 Definitions.
6.104-6.109 [Reserved]
6.110 Self-evaluation.
6.111 Notice.
6.112-6.129 [Reserved]
6.130 General prohibitions against discrimination.
6.131-6.139 [Reserved]
6.140 Employment.
6.141-6.148 [Reserved]
6.149 Program accessibility: Discrimination prohibited.
6.150 Program accessibility: Existing facilities.
6.151 Program accessibility: New construction and alterations.
6.152 Program accessibility: Electronic and information technology.
6.153-6.159 [Reserved]
6.160 Communications.
6.161-6.169 [Reserved]
6.170 Compliance procedures.
6.171-6.999 [Reserved]

    Authority: 29 U.S.C. 794, 794d.

    Source: 52 FR 45628, Dec. 1, 1987, unless otherwise noted.



Sec. 6.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service. This part also implements section 508 of the Rehabilitation Act 
of 1973, as amended, with respect to the accessibility of electronic and 
information technology developed, procured, maintained, or used by the 
agency.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51863, Oct. 11, 2001]



Sec. 6.102  Application.

    This part applies to all programs or activities conducted by the 
Commission except for programs or activities conducted outside the 
United States that do not involve individuals with handicaps in the 
United States.



Sec. 6.103  Definitions.

    For purposes of this part, the term--
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and to enjoy the benefits of, programs or 
activities conducted by the Commission. For example, auxiliary aids 
useful for persons with impaired vision include readers, Brailled 
materials, audio recordings, and other similar services and devices. 
Auxiliary aids useful for persons with impaired hearing include 
telephone handset amplifiers, telephones compatible with hearing aids, 
telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Commission means the Federal Trade Commission.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the Commission's alleged 
discriminatory action in sufficient detail to inform the Commission of 
the nature and date of the alleged violation of section

[[Page 120]]

504. It shall be signed by the complainant or by someone authorized to 
do so on his or her behalf. Complaints filed on behalf of classes or 
third parties shall describe or identify (by name, if possible) the 
alleged victims of discrimination.
    Electronic and information technology includes information 
technology and any equipment or interconnected system or subsystem of 
equipment that is used in the creation, conversion, or duplication of 
data or information. The term includes, but is not limited to, 
telecommunications products (such as telephones), information kiosks and 
transaction machines, World Wide Web sites, multimedia, and office 
equipment such as copiers and fax machines. The term does not include 
any equipment that contains embedded information technology that is used 
as an integral part of the product, but the principal function of which 
is not the acquisition, storage, manipulation, management, movement, 
control, display, switching, interchange, transmission, or reception of 
data or information. For example, HVAC (heating, ventilation, and air 
conditioning) equipment such as thermostats or temperature control 
devices, and medical equipment where information technology is integral 
to its operation are not electronic and information technology.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech, and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the Commission as 
constituting such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the Commission as having such an 
impairment.
    Information technology means any equipment or interconnected system 
or subsystem of equipment that is used in the automatic acquisition, 
storage, manipulation, management, movement, control, display, 
switching, interchange, transmission, or reception of data or 
information. The term ``information technology'' includes computers, 
ancillary equipment, software, firmware and similar procedures, services 
(including support services), and related resources.
    Qualified individual with handicaps means--
    (1) With respect to any Commission program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment,

[[Page 121]]

an individual with handicaps who meets the essential eligibility 
requirements and who can achieve the purpose of the program or activity 
without modifications in the program or activity that the Commission can 
demonstrate would result in a fundamental alteration in its nature; and
    (2) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity.
    (3) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1613.702 (f), which is made applicable 
to this part by Sec. 6.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955) and the 
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810). 
As used in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Section 508 means section 508 of the Rehabilitation Act of 1973, as 
amended.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51863, Oct. 11, 2001]



Sec. Sec. 6.104-6.109  [Reserved]



Sec. 6.110  Self-evaluation.

    (a) The Commission shall, by February 1, 1989, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the Commission shall 
proceed to make the necessary modifications.
    (b) The Commission shall provide an opportunity to interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps, to participate in the self-
evaluation process by submitting comments (both oral and written).
    (c) The Commission shall, for at least three years following 
completion of the self-evaluation required under paragraph (a) of this 
section, maintain on file and make available for public inspection:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 6.111  Notice.

    The Commission shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the Commission, and make such 
information available to them in such manner as the Chairman or his or 
her designee finds necessary to apprise such persons of the protections 
against discrimination assured to them by section 504 and this 
regulation.



Sec. Sec. 6.112-6.129  [Reserved]



Sec. 6.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the Commission.
    (b)(1) The Commission, in providing any aid, benefit, or service, 
may not, directly or through contractual, licensing, or other 
arrangements, on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;

[[Page 122]]

    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The Commission may not deny a qualified individual with 
handicaps the opportunity to participate in programs or activities that 
are not separate or different, despite the existence of permissibly 
separate or different programs or activities.
    (3) The Commission may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The Commission may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the Commission; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The Commission, in the selection of procurement contractors, may 
not use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The Commission shall administer programs and activities in the 
most integrated setting appropriate to the needs of qualified 
individuals with handicaps.



Sec. Sec. 6.131-6.139  [Reserved]



Sec. 6.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the Commission. The definitions, requirements 
and procedures of section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613, shall apply to employment in federally 
conducted programs or activities.



Sec. Sec. 6.141-6.148  [Reserved]



Sec. 6.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 6.150, no qualified 
individuals with handicaps shall, because the Commission's facilities 
are inaccessible to or unusable by individuals with handicaps, be denied 
the benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the Commission.



Sec. 6.150  Program accessibility: Existing facilities.

    (a) General. The Commission shall operate each program or activity 
so that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the Commission to make each of its existing 
facilities accessible to and usable by individuals with handicaps, or
    (2) Require the Commission to take any action that it can 
demonstrate

[[Page 123]]

would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where Commission personnel believe that the proposed 
action would fundamentally alter the program or activity or would result 
in undue financial and administrative burdens, the Commission has the 
burden of proving that compliance with Sec. 6.150(a) would result in 
such alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the Chairman or his or her 
designee after considering all Commission resources available for use in 
the funding and operation of the conducted program or activity, and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the Commission shall take any other action that would not 
result in such an alteration or such burdens, but would, nevertheless, 
ensure that individuals with handicaps receive the benefits and services 
of the program or activity.
    (b) Methods. The Commission may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any methods that result in making 
its programs or activities readily accessible to and usable by 
individuals with handicaps. The Commission is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The Commission, in 
making alterations to existing buildings, shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157) and any regulations 
implementing it. In choosing among available methods for meeting the 
requirements of this section, the Commission shall give priority to 
those methods that offer programs and activities to qualified 
individuals with handicaps in the most integrated setting appropriate.
    (c) Time period for compliance. The Commission shall comply with the 
obligations established under this section by April 1, 1988, except that 
where structural changes in facilities are undertaken, such changes 
shall be made by February 1, 1991, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
Commission shall develop, by August 1, 1988, a transition plan setting 
forth the steps necessary to complete such changes. The Commission shall 
provide an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the Commission's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period;
    (4) Indicate the official responsible for implementation of the 
plan; and
    (5) Identify the persons or groups with whose assistance the plan 
was prepared.



Sec. 6.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the Commission shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607,

[[Page 124]]

apply to buildings covered by this section.



Sec. 6.152  Program accessibility: Electronic and information technology.

    (a) When developing, procuring, maintaining, or using electronic and 
information technology, the Commission shall ensure, unless an undue 
burden would be imposed on the agency, that the electronic and 
information technology allows, regardless of the type of medium of the 
technology:
    (1) individuals with disabilities who are employees to have access 
to and use of information and data that is comparable to the access to 
and use of the information and data by employees who are not individuals 
with disabilities; and
    (2) individuals with disabilities who are members of the public 
seeking information or services from the Commission to have access to 
and use of information and data that is comparable to the access to and 
use of the information and data by members of the public who are not 
individuals with disabilities.
    (b) When the development, procurement, maintenance, or use of 
electronic and information technology that meets the standards published 
by the Architectural and Transportation Barriers Compliance Board 
pursuant to section 508(a)(2) of the Rehabilitation Act of 1973, as 
amended, would impose an undue burden on the Commission, the Commission 
shall provide individuals with disabilities covered by paragraph (a) of 
this section with the information and data involved by an alternative 
means of access that allows such individuals to use the information and 
data.
    (c) This section shall not apply to any matter legally exempted by 
section 508, by the standards referenced in paragraph (b) of this 
section, or by other applicable law or regulation. Nothing in this 
section shall be construed to limit any right, remedy, or procedure 
otherwise available under any provision of federal law (including 
sections 501 through 505 of the Rehabilitation Act of 1973, as amended) 
that provides greater or equal protection for the rights of individuals 
with disabilities than section 508.

[66 FR 51863, Oct. 11, 2001]



Sec. Sec. 6.153-6.159  [Reserved]



Sec. 6.160  Communications.

    (a) The Commission shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The Commission shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the Commission.
    (i) In determining what type of auxiliary aid is necessary, the 
Commission shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The Commission need not provide individually prescribed 
devices, readers for personal use or study, or other devices of a 
personal nature.
    (2) Where the Commission communicates with applicants and 
beneficiaries by telephone, telecommunication devices for deaf persons 
(TDD's), or equally effective telecommunication systems shall be used.
    (b) The Commission shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The Commission shall provide signs at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the Commission to take any action 
that it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity, or in undue financial and 
administrative burdens. In those circumstances where Commission 
personnel believe that the proposed action would fundamentally alter the 
program or activity or would

[[Page 125]]

result in undue financial and administrative burdens, the Commission has 
the burden of proving that compliance with Sec. 6.160 would result in 
such alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the Chairman or his or her 
designee after considering all Commission resources available for use in 
the funding and operation of the conducted program or activity, and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the Commission shall take 
any other action that would not result in such an alteration or burdens 
but would nevertheless ensure that, to the maximum extent possible, 
individuals with handicaps receive the benefits and services of the 
program or activity.



Sec. Sec. 6.161-6.169  [Reserved]



Sec. 6.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the Commission.
    (b) The Commission shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791). The Commission shall apply the same procedures to process 
complaints alleging violations of section 508. Complaints alleging a 
violation of section 508 may not be filed with respect to any exempted 
matters as described in Sec. 6.152(c) of this chapter, and may be filed 
only with respect to electronic and information technology procured by 
the Commission on or after June 21, 2001.
    (c) Responsibility for implementation and operation of this section 
is vested in the Director of Equal Employment Opportunity.
    (d)(1) A complete complaint under this section may be filed by any 
person who believes that he or she or any specific class of persons of 
which he or she is a member has been subjected to discrimination 
prohibited by this part. The complaint may also be filed by an 
authorized representative of any such person.
    (2) The complaint must be filed within 180 days of the alleged act 
of discrimination unless the Director of Equal Employment Opportunity 
extends the time period for good cause.
    (3) The complaint must be addressed to the Director of Equal 
Employment Opportunity, Federal Trade Commission, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580.
    (e) If the Director of Equal Employment Opportunity receives a 
complaint over which the Commission does not have jurisdiction, he or 
she shall promptly notify the complainant and shall make reasonable 
efforts to refer the complaint to the appropriate Government entity.
    (f) The Director of Equal Employment Opportunity shall notify the 
Architectural and Transportation Barriers Compliance Board upon receipt 
of any complaint alleging that a building or facility that is subject to 
the Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151-4157) 
is not readily accessible to and usable by individuals with handicaps.
    (g)(1) The Director of Equal Employment Opportunity shall accept and 
investigate a complete complaint that is filed in accordance with 
paragraph (d) of this section and over which the Commission has 
jurisdiction.
    (2) If the Director of Equal Employment Opportunity receives a 
complaint that is not complete (see Sec. 6.103), he or she shall, 
within 30 days thereafter, notify the complainant that additional 
information is needed. If the complainant fails to complete the 
complaint within 30 days of the date of the Director's notice, the 
Director of Equal Employment Opportunity may dismiss the complaint 
without prejudice.
    (h) Within 180 days of the receipt of a complete complaint over 
which the Commission has jurisdiction, the Director of Equal Employment 
Opportunity shall notify the complainant of the results of the 
investigation in a letter containing--

[[Page 126]]

    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal to the Commission's General 
Counsel.
    (i)(1) An appeal under this section must be filed within 90 days of 
the complainant's receipt of the letter under paragraph (h) of this 
section unless the General Counsel extends the time period for good 
cause.
    (2) The appeal must be addressed to the General Counsel, Federal 
Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.
    (3) The appeal shall specify the questions raised by the appeal and 
the arguments on the points of fact and law relied upon in support of 
the position taken on each question; and it shall include copies of the 
complaint filed under paragraph (d) of this section and the letter by 
the Director of Equal Employment Opportunity under paragraph (h) of this 
section as well as any other material relied upon in support of the 
appeal.
    (j) The General Counsel shall notify the complainant of the results 
of the appeal within 60 days of the receipt of the appeal. If the 
General Counsel determines that additional information is needed from 
the complainant, the General Counsel shall have 60 days from the date of 
receipt of the additional information to make a final determination on 
the appeal. The General Counsel may submit the appeal to the Commission 
for final determination provided that any final determination of the 
appeal is made by the Commission within the 60-day period specified by 
this paragraph.
    (k) The time limits specified by paragraphs (h) and (j) of this 
section may be extended by the Chairman for good cause.
    (l) The Commission may delegate its authority for conducting 
complaint investigations to other Federal agencies, except that the 
authority for making the final determination may not be delegated.

[52 FR 45628, Dec. 1, 1987, as amended at 66 FR 51864, Oct. 11, 2001]



Sec. Sec. 6.171-6.999  [Reserved]



PART 14_ADMINISTRATIVE INTERPRETATIONS, GENERAL POLICY STATEMENTS, 
AND ENFORCEMENT POLICY STATEMENTS--Table of Contents




Sec.
14.9 Requirements concerning clear and conspicuous disclosures in 
          foreign language advertising and sales materials.
14.12 Use of secret coding in marketing research.
14.15 In regard to comparative advertising.
14.16 Interpretation of Truth-in-Lending Orders consistent with 
          amendments to the Truth-in-Lending Act and Regulation Z.

    Authority: 15 U.S.C. 41-58.



Sec. 14.9  Requirements concerning clear and conspicuous disclosures 
in foreign language advertising and sales materials.

    The Federal Trade Commission has noted that, with increasing 
intensity, advertisers are making special efforts to reach foreign 
language-speaking consumers. As part of this special effort, 
advertisements, brochures and sales documents are being printed in 
foreign languages. In recent years the Commission has issued various 
cease-and-desist orders as well as rules, guides and other statements, 
which require affirmative disclosures in connection with certain kinds 
of representations and business activities. Generally, these disclosures 
are required to be ``clear and conspicuous.'' Because questions have 
arisen as to the meaning and application of the phrase ``clear and 
conspicuous'' with respect to foreign language advertisements and sales 
materials, the Commission deems it appropriate to set forth the 
following enforcement policy statement:
    (a) Where cease-and-desist orders as well as rules, guides and other 
statements require ``clear and conspicuous'' disclosure of certain 
information in an advertisement or sales material in a newspaper, 
magazine, periodical, or other publication that is not in English, the 
disclosure shall appear in the predominant language of the publication 
in which the advertisement or sales material appears. In the case of any 
other advertisement or sales material, the disclosure shall appear in 
the

[[Page 127]]

language of the target audience (ordinarily the language principally 
used in the advertisement or sales material).
    (b) Any respondent who fails to comply with this requirement may be 
the subject of a civil penalty or other law enforcement proceeding for 
violating the terms of a Commission cease-and-desist order or rule.

(Sec. 5, 38 Stat. 719, as amended; 15 U.S.C. 45)

[38 FR 21494, Aug. 9, 1973, as amended at 63 FR 34808, June 26, 1998]



Sec. 14.12  Use of secret coding in marketing research.

    (a) The Federal Trade Commission has determined to close its 
industry-wide investigation of marketing research firms that was 
initiated in November 1975, to determine if the firms were using 
questionnaires with invisible coding that could be used to reveal a 
survey respondent's identity. After a thorough investigation, the 
Commission has determined that invisible coding has been used by the 
marketing research industry, but it is neither a commonly used nor 
widespread practice. Moreover, use of the practice appears to have 
diminished in recent years. For these reasons, the Commission has 
determined that further action is not warranted at this time.
    (b) However, for the purpose of providing guidance to the marketing 
research industry, the Commission is issuing the following statement 
with regard to its future enforcement intentions. The Commission has 
reason to believe that it is an unfair or deceptive act or practice, 
violative of section 5 of the Federal Trade Commission Act (15 U.S.C. 
45) to induce consumers to provide information about themselves by 
expressly or implicitly promising that such information is being 
provided anonymously, when, in fact, a secret or invisible code is used 
on the survey form or return envelope that allows identification of the 
consumer who has provided the information.
    (c) While the Commission has made no final determination regarding 
the legality of the foregoing practice, the Commission will take 
appropriate enforcement action should it discover the practice to be 
continuing in the future, and in the event that it may be causing 
substantial consumer injury. Among the circumstances in which the 
Commission believes that the use of secret coding may cause significant 
consumer harm are those in which:
    (1) A misleading promise of anonymity is used to obtain highly 
sensitive information about a consumer that such consumer would not 
choose to disclose if he or she were informed that a code was being used 
that would allow his or her name to be associated with the response; and
    (2) Information of any sort is used for purposes other than those of 
the market survey.

[43 FR 42742, Sept. 21, 1978]



Sec. 14.15  In regard to comparative advertising.

    (a) Introduction. The Commission's staff has conducted an 
investigation of industry trade associations and the advertising media 
regarding their comparative advertising policies. In the course of this 
investigation, numerous industry codes, statements of policy, 
interpretations and standards were examined. Many of the industry codes 
and standards contain language that could be interpreted as discouraging 
the use of comparative advertising. This Policy Statement enunciates the 
Commission's position that industry self-regulation should not restrain 
the use by advertisers of truthful comparative advertising.
    (b) Policy Statement. The Federal Trade Commission has determined 
that it would be of benefit to advertisers, advertising agencies, 
broadcasters, and self-regulation entities to restate its current policy 
concerning comparative advertising. \1\ Commission policy in the area of 
comparative advertising encourages the naming of, or reference to 
competitiors, but requires clarity, and, if necessary, disclosure to 
avoid deception of the consumer. Additionally, the use of truthful 
comparative advertising should not be restrained by broadcasters or 
self-regulation entities.
---------------------------------------------------------------------------

    \1\ For purposes of this Policy Statement, comparative advertising 
is defined as advertising that compares alternative brands on 
objectively measurable attributes or price, and identifies the 
alternative brand by name, illustration or other distinctive 
information.

---------------------------------------------------------------------------

[[Page 128]]

    (c) The Commission has supported the use of brand comparisions where 
the bases of comparision are clearly identified. Comparative 
advertising, when truthful and nondeceptive, is a source of important 
information to consumers and assists them in making rational purchase 
decisions. Comparative advertising encourages product improvement and 
innovation, and can lead to lower prices in the marketplace. For these 
reasons, the Commission will continue to scrutinize carefully restraints 
upon its use.
    (1) Disparagement. Some industry codes which prohibit practices such 
as ``disparagement,'' ``disparagement of competitors,'' ``improper 
disparagement,'' ``unfairly attaching,'' ``discrediting,'' may operate 
as a restriction on comparative advertising. The Commission has 
previously held that disparaging advertising is permissible so long as 
it is truthful and not deceptive. In Carter Products, Inc., 60 F.T.C. 
782, modified, 323 F.2d 523 (5th Cir. 1963), the Commission narrowed an 
order recommended by the hearing examiner which would have prohibited 
respondents from disparaging competing products through the use of false 
or misleading pictures, depictions, or demonstrations, ``or otherwise'' 
disparaging such products. In explaining why it eliminated ``or 
otherwise'' from the final order, the Commission observed that the 
phrase would have prevented:

    respondents from making truthful and non-deceptive statements that a 
product has certain desirable properties or qualities which a competing 
product or products do not possess. Such a comparison may have the 
effect of disparaging the competing product, but we know of no rule of 
law which prevents a seller from honestly informing the public of the 
advantages of its products as opposed to those of competing products. 60 
F.T.C. at 796.


Industry codes which restrain comparative advertising in this manner are 
subject to challenge by the Federal Trade Commission.
    (2) Substantiation. On occasion, a higher standard of substantiation 
by advertisers using comparative advertising has been required by self-
regulation entities. The Commission evaluates comparative advertising in 
the same manner as it evaluates all other advertising techniques. The 
ultimate question is whether or not the advertising has a tendency or 
capacity to be false or deceptive. This is a factual issue to be 
determined on a case-by-case basis. However, industry codes and 
interpretations that impose a higher standard of substantiation for 
comparative claims than for unilateral claims are inappropriate and 
should be revised.

(Sec. 5, 38 Stat. 719, as amended; 15 U.S.C. 45)

[44 FR 47328, Aug. 13, 1979]



Sec. 14.16  Interpretation of Truth-in-Lending Orders consistent 
with amendments to the Truth-in-Lending Act and Regulation Z.

                              Introduction

    The Federal Trade Commission (FTC) has determined that there is a 
need to clarify the compliance responsibilities under the Truth-in-
Lending Act (TILA) (Title I, Consumer Credit Protection Act, 15 U.S.C. 
1601 et seq.), as amended by the Truth-in-Lending Simplification and 
Reform Act of 1980 (Pub. L. 96-221, 94 Stat. 168), and under revised 
Regulation Z (12 CFR part 226, 46 FR 20848), and subsequent amendments 
to the TILA and Regulation Z, of those creditors and advertisers who are 
subject to final cease and desist orders that require compliance with 
provisions of the Truth-in-Lending statute or Regulation Z. 
Clarification is necessary because the Truth-in-Lending Simplification 
and Reform Act and revised Regulation Z significantly relaxed prior 
Truth-in-Lending requirements on which provisions of numerous 
outstanding orders were based. The Policy Statement provides that the 
Commission will interpret and enforce Truth-in-Lending provisions of all 
orders so as to impose no greater or different disclosure obligations on 
creditors and advertisers named in such orders than are required 
generally of creditors and advertisers under the TILA and Regulation Z, 
and subsequent amendments to the TILA and Regulation Z.

                            Policy Statement

    (a) All cease and desist orders issued by the FTC that require 
compliance

[[Page 129]]

with provisions of the Truth-in-Lending Act and Regulation Z (12 CFR 
part 226) will be interpreted and enforced consistent with the 
amendments to the TILA incorporated by the Truth-in-Lending 
Simplification and Reform Act of 1980, and the revision of Regulation Z 
implementing the same, promulgated on April 1, 1981 by the Board of 
Governors of the Federal Reserve System (46 FR 20848), and by subsequent 
amendments to the TILA and Regulation Z. Likewise, the Federal Reserve 
Board staff commentary to revised Regulation Z (46 FR 50288, October 9, 
1981), and subsequent revisions to the Federal Reserve Board staff 
commentary to Regulation Z, will be considered in interpreting the 
requirements of existing orders.
    (b) After an amendment to Regulation Z becomes effective, compliance 
with the revised credit disclosure requirements will be considered 
compliance with the existing order, and:
    (1) To the extent that revised Regulation Z deletes disclosure 
requirements imposed by any Commission order, compliance with these 
requirements will no longer be required; however,
    (2) To the extent that revised Regulation Z imposes additional 
disclosure or format requirements, a failure to comply with the added 
requirements will be considered a violation of the TILA.
    (c) A creditor or advertiser must continue to comply with all 
provisions of the order which do not relate to Truth-in-Lending Act 
requirements or are unaffected by Regulation Z. These provisions are not 
affected by this policy statement and will remain in full force and 
effect.

                          Staff Clarifications

    The Commission intends that this Enforcement Policy Statement 
obviate the need for any creditor or advertiser to file a petition to 
reopen and modify any affected order under section 2.51 of the 
Commission's rules of practice (16 CFR 2.51). However, the Commission 
recognizes that the policy statement may not provide clear guidance to 
every creditor or advertiser under order. The staff of the Division of 
Enforcement, Bureau of Consumer Protection, will respond to written 
requests for clarification of any order affected by this policy 
statement.

[60 FR 42033, Aug. 15, 1995]



PART 16_ADVISORY COMMITTEE MANAGEMENT--Table of Contents




Sec.
16.1 Purpose and scope.
16.2 Definitions.
16.3 Policy.
16.4 Advisory Committee Management Officer.
16.5 Establishment of advisory committees.
16.6 Charter.
16.7 Meetings.
16.8 Closed meetings.
16.9 Notice of meetings.
16.10 Minutes and transcripts of meetings.
16.11 Annual comprehensive review.
16.12 Termination of advisory committees.
16.13 Renewal of advisory committees.
16.14 Amendments.
16.15 Reports of advisory committees.
16.16 Compensation.

    Authority: Federal Advisory Committee Act, 5 U.S.C. App. I Section 
8(a).

    Source: 51 FR 30055, Aug. 22, 1986, unless otherwise noted.



Sec. 16.1  Purpose and scope.

    (a) The regulations in this part implement the Federal Advisory 
Committee Act, 5 U.S.C. App. I.
    (b) These regulations shall apply to any advisory committee, as 
defined in paragraph (b) of Sec. 16.2 of this part. However, to the 
extent that an advisory committee is subject to particular statutory 
provisions that are inconsistent with the Federal Advisory Committee 
Act, these regulations do not apply.



Sec. 16.2  Definitions.

    For purposes of this part:
    (a) Administrator means the Administrator of the General Services 
Administration.
    (b) Advisory committee, subject to exclusions described in paragraph 
(b)(2) of this section, means any committee, board, commission, council, 
panel, task force, or other similar group, or any subcommittee or other 
subgroup thereof, which is established or utilized by the Commission for 
the purpose of obtaining advice or recommendations for the Commission or 
other agency or officer of the Federal Government on

[[Page 130]]

matters that are within the scope of the Commission's jurisdiction.
    (1) Where a group provides some advice to the Commission but the 
group's advisory function is incidental and inseparable from other 
(e.g., operational or management) functions, the provisions of this part 
do not apply. However, if the advisory function is separable, the group 
is subject to this part to the extent that the group operates as an 
advisory committee.
    (2) Groups excluded from the effect of the provisions of this part 
include:
    (i) Any committee composed wholly of full-time officers or employees 
of the Federal Government;
    (ii) Any committee, subcommittee or subgroup that is exclusively 
operational in nature (e.g., has functions that include making or 
implementing decisions, as opposed to the offering of advice or 
recommendations);
    (iii) Any inter-agency advisory committee unless specifically made 
applicable by the establishing authority.
    (c) Commission means the Federal Trade Commission.
    (d) GSA means the General Services Administration.
    (e) Secretariat means the Committee Management Secretariat of the 
General Services Administration.
    (f) Sunshine Act means the Government in the Sunshine Act, 5 U.S.C. 
552b.



Sec. 16.3  Policy.

    (a) The Commission's policy shall be to:
    (1) Establish an advisory committee only when it is essential to the 
conduct of agency business;
    (2) Insure that adequate information is provided to the Congress and 
the public regarding advisory committees, and that there are adequate 
opportunities for access by the public to advisory committee meetings;
    (3) Insure that the membership of the advisory committee is balanced 
in terms of the points of view represented and the functions to be 
performed; and
    (4) Terminate an advisory committee whenever the stated objectives 
of the committee have been accomplished; the subject matter or work of 
the advisory committee has become obsolete; the cost of operating the 
advisory committee is excessive in relation to the benefits accruing to 
the Commission; or the advisory committee is otherwise no longer a 
necessary or appropriate means to carry out the purposes for which it 
was established.
    (b) No advisory committee may be used for functions that are not 
solely advisory unless specifically authorized to do so by law. The 
Commission shall be solely responsible for making policy decisions and 
determining action to be taken with respect to any matter considered by 
an advisory committee.



Sec. 16.4  Advisory Committee Management Officer.

    (a) The Commission shall designate the Executive Director as the 
Advisory Committee Management Officer who shall:
    (1) Exercise control and supervision over the establishment, 
procedures, and accomplishments of the advisory committees established 
by the Commission;
    (2) Assemble and maintain the reports, records, and other papers of 
any advisory committee during its existence;
    (3) Carry out, on behalf of the Commission, the provisions of the 
Freedom of Information Act, 5 U.S.C. 552, with respect to such reports, 
records, and other papers;
    (4) Maintain in a single location a complete set for the charters 
and membership lists of each of the Commission's advisory committees;
    (5) Maintain information on the nature, functions, and operations of 
each of the Commission's advisory committees; and
    (6) Provide information on how to obtain copies of minutes of 
meetings and reports of each of the Commission's advisory committees.
    (b) The name of the Advisory Committee Management Officer designated 
in accordance with this part, and his or her agency address and 
telephone number, shall be provided to the Secretariat.



Sec. 16.5  Establishment of advisory committees.

    (a) No advisory committee shall be established under this part 
unless such establishment is:

[[Page 131]]

    (1) Specifically authorized by statute; or
    (2) Determined as a matter of formal record by the Commission, after 
consultation with the Administrator, to be in the public interest in 
connection with the performance of duties imposed on the Commission by 
law.
    (b) In establishing an advisory committee, the Commission shall:
    (1) Prepare a proposed charter for the advisory committee in 
accordance with Sec. 16.6 of this part; and
    (2) Submit an original and one copy of a letter to the Administrator 
requesting concurrence in the Commission's proposal to establish an 
advisory committee. The letter from the Commission shall describe the 
nature and purpose of the proposed advisory committee, including an 
explanation of why establishment of the advisory committee is essential 
to the conduct of agency business and in the public interest and why the 
functions of the proposed committee could not be performed by the 
Commission, by an existing committee, or through other means. The letter 
shall also describe the Commission's plan to attain balanced membership 
on the proposed advisory committee in terms of points of view to be 
represented and functions to be performed. The letter shall be 
accompanied by two copies of the proposed charter.
    (c) Upon the receipt of notification from the Administrator of his 
or her concurrence or nonconcurrence, the Commission shall notify the 
Administrator in writing that either:
    (1) The advisory committee is being established. The filing of an 
advisory committee charter as specified in Sec. 16.6 of this part shall 
be deemed appropriate written notification in this instance; or
    (2) The advisory committee is not being established.
    (d) If the Commission determines that an advisory committee should 
be established in accordance with paragraph (c) of this section, the 
Commission shall publish notice to that effect in the Federal Register 
at least fifteen days prior to the filing of the advisory committee's 
charter unless the Administrator authorizes publication of such notice 
within a shorter period of time. The notice shall identify the name and 
purpose of the advisory committee, state that the committee is necessary 
and in the public interest, and identify the name and address of the 
Commission official to whom the public may submit comments.
    (e) The Commission may issue regulations or guidelines as may be 
necessary to operate and oversee a particular advisory committee.



Sec. 16.6  Charter.

    (a) No advisory committee established, utilized, reestablished or 
renewed by the Commission under this part shall meet or take any action 
until its charter has been filed by the Commission with the standing 
committees of the Senate and House of Representatives having legislative 
jurisdiction over the Commission.
    (b) The charter required by paragraph (a) of this section shall 
include the following information:
    (1) The committee's official designation;
    (2) The committee's objectives and the scope of its activity;
    (3) The period of time necessary for the committee to carry out its 
purposes;
    (4) The Commission component or official to whom the committee 
reports;
    (5) The agency or official responsible for providing the necessary 
support for the committee;
    (6) A description of the duties for which the committee is 
responsible, and, if such duties are not solely advisory, a 
specification of the authority for such functions;
    (7) The estimated annual operating cost in dollars and man-years for 
the committee;
    (8) The estimated number and frequency of committee meetings;
    (9) The committee's termination date, if less than two years from 
the date of committee's establishment; and
    (10) The date the charter is filed.
    (c) A copy of the charter required by paragraph (a) of this section 
shall also be furnished at the time of filing to the Secretariat and the 
Library of Congress.
    (d) The requirements of this section shall also apply to committees 
utilized as advisory committees, even though

[[Page 132]]

not expressly established for that purpose.



Sec. 16.7  Meetings.

    (a) The Commission shall designate an officer or employee of the 
Federal Government as the Designated Federal Officer for the advisory 
committee. The Designated Federal Officer shall attend the meetings of 
the advisory committee, and shall adjourn committee meetings whenever he 
or she determines that adjournment is in the public interest. The 
Commission, in its discretion, may authorize the Designated Federal 
Officer to chair meetings of the advisory committee.
    (b) No meeting of any advisory committee shall be held except at the 
call of, or with the advance approval of, the Designated Federal Officer 
and with an agenda approved by such official.
    (c) The agenda required by paragraph (b) of this section shall 
identify, in general terms, matters to be considered at the meeting and 
shall indicate whether any part of the meeting will concern matters that 
the General Counsel has determined to be covered by one or more of the 
exemptions of the Sunshine Act.
    (d) Timely notice of each meeting of the advisory committee shall be 
provided in accordance with Sec. 16.9 of this part.
    (e) Subject to the provisions of Sec. 16.8 of this part, each 
meeting of an advisory committee as defined in Sec. 16.2(b) of this 
part shall be open to the public. Subcommittees and subgroups that are 
not utilized by the Commission for the purpose of obtaining advice or 
recommendations do not constitute advisory committees within the meaning 
of Sec. 16.2(b) and are not subject to the meeting and other 
requirements of this part.
    (f) Meetings that are completely or partly open to the public shall 
be held at reasonable times and at places that are reasonably accessible 
to members of the public. The size of the meeting room shall be 
sufficient to accommodate members of the public who can reasonably be 
expected to attend.
    (g) Any member of the public shall be permitted to file a written 
statement with the committee concerning any matter to be considered in a 
meeting. Interested persons may be permitted by the committee chairman 
to speak at such meetings in accordance with procedures established by 
the committee and subject to the time constraints under which the 
meeting is to be conducted.
    (h) No meeting of any advisory committee shall be held in the 
absence of a quorum. Unless otherwise established by statute or in the 
charter of the committee, a quorum shall consist of a majority of the 
committee's authorized membership.



Sec. 16.8  Closed meetings.

    (a) Paragraphs (e), (f), and (g) of Sec. 16.7 of this part, which 
require that meetings shall be open to the public and that the public 
shall be afforded an opportunity to participate in such meetings, shall 
not apply to any advisory committee meeting (or any portion thereof) 
which the Commission determines is concerned with any matter covered by 
one or more of the exemptions set forth in paragraph (c) of the Sunshine 
Act, 5 U.S.C. section 552b(c).
    (b) An advisory committee that seeks to have all or part of its 
meeting closed shall notify the Commission at least thirty days before 
the scheduled date of the meeting. The notification shall be in writing 
and shall identify the specific provisions of the Sunshine Act which 
justify closure. The Commission may waive the thirty-day requirement 
when a lesser period of time is requested and justified by the advisory 
committee.
    (c) The General Counsel shall review all requests to close meetings 
and shall advise the Commission on the disposition of each such request.
    (d) If the Commission determines that the request is consistent with 
the policies of the Sunshine Act and the Federal Advisory Committee Act, 
it shall issue a determination that all or part of the meeting may be 
closed. A copy of the Commission's determination shall be made available 
to the public upon request.
    (e) The advisory committee shall issue, on an annual basis, a report 
that sets forth a summary of its activities in meetings closed pursuant 
to this section, addressing those related matters as would be 
informative to the

[[Page 133]]

public and consistent with the policy of the Sunshine Act and of this 
part. Notice of the availability of such annual reports shall be 
published in accordance with Sec. 16.15 of this part.



Sec. 16.9  Notice of meetings.

    (a) Notice of each advisory committee meeting, whether open or 
closed to the public, shall be published in the Federal Register at 
least 15 days before the meeting date. Such notice shall include the 
exact name of the advisory committee as chartered; the time, date, place 
and purpose of the meeting; and a summary of the meeting agenda. Notice 
shall also state that the meeting is open to the public or closed in 
whole or in part, and, if closed, cite the specific exemptions of the 
Sunshine Act as the basis for closure. The Commission may permit the 
advisory committee to provide notice of less than fifteen days in 
extraordinary situations, provided that the reasons for doing so are 
included in the meeting notice.
    (b) In addition to the notice required by paragraph (a) of this 
section, other forms of notice such as press releases and notices in 
professional journals may be used to inform interested members of the 
public of advisory committee meetings.



Sec. 16.10  Minutes and transcripts of meetings.

    (a) Detailed minutes of each advisory committee meeting shall be 
kept. The minutes shall reflect the time, date and place of the meeting; 
and accurate summary of each matter that was discussed and each 
conclusion reached; and a copy of each report or other document 
received, issued, or approved by the advisory committee. In addition, 
the minutes shall include a list of advisory committee members and staff 
and full-time Federal employees who attended the meeting; a list of 
members of the public who presented oral or written statements; and an 
estimated number of members of the public who were present at the 
meeting. The minutes shall describe the extent to which the meeting was 
open to the public and the nature and extent of any public 
participation. If it is impracticable to attach to the minutes of the 
meeting any document received, issued, or approved by the advisory 
committee, then the minutes shall describe the document in sufficient 
detail to enable any person who may request the document to identify it 
readily.
    (b) The accuracy of all minutes shall be certified to by the 
chairperson of the advisory committee.
    (c) Minutes need not be kept if a verbatim transcript is made.



Sec. 16.11  Annual comprehensive review.

    (a) The Commission shall conduct an annual comprehensive review of 
the activities and responsibilities of each advisory committee to 
determine:
    (1) Whether such committee is carrying out its purpose;
    (2) Whether, consistent with the provisions of applicable statutes, 
the responsibilities assigned to it should be revised;
    (3) Whether it should be merged with any other advisory committee or 
committees; or
    (4) Whether it should be abolished.
    (b) Pertinent factors to be considered in the comprehensive review 
required by paragraph (a) of this section include the following:
    (1) The number of times the committee has met in the past year;
    (2) The number of reports or recommendations submitted by the 
committee;
    (3) An evaluation of the substance of the committee's reports or 
recommendations with respect to the Commission's programs or operations;
    (4) An evaluation (with emphasis on the preceding twelve month 
period of the committee's work) of the history of the Commission's 
utilization of the committee's recommendations in policy formulation, 
program planning, decision making, more effective achievement of program 
objectives, and more economical accomplishment of programs in general.
    (5) Whether information or recommendations could be obtained from 
sources within the Commission or from another advisory committee already 
in existence;
    (6) The degree of duplication of effort by the committee as compared 
with that of other parts of the Commission or other advisory committees; 
and

[[Page 134]]

    (7) The estimated annual cost of the committee.
    (c) The annual review required by this section shall be conducted on 
a fiscal year basis, and results of the review shall be included in the 
annual report to the GSA required by Sec. 16.15 of this part. The 
report shall contain a justification of each advisory committee which 
the Commission determines should be continued, making reference, as 
appropriate, to the factors specified in paragraph (b) of this section.



Sec. 16.12  Termination of advisory committees.

    Any advisory committee shall automatically terminate not later than 
two years after it is established, reestablished, or renewed, unless:
    (a) Its duration is otherwise provided by law;
    (b) It is renewed in accordance with Sec. 16.13 of this part; or
    (c) The Commission terminates it before that time.



Sec. 16.13  Renewal of advisory committees.

    (a) Any advisory committee established under this part may be 
renewed by appropriate action of the Commission and the filing of a new 
charter. An advisory committee may be continued by such action for 
successive two-year periods.
    (b) Before it renews an advisory committee in accordance with 
paragraph (a) of this section, the Commission will inform the 
Administrator by letter, not more than sixty days nor less than thirty 
days before the committee expires, of the following:
    (1) Its determination that a renewal is necessary and in the public 
interest;
    (2) The reasons for its determination;
    (3) The Commission's plan to maintain balanced membership on the 
committee;
    (4) An explanation of why the committee's functions cannot be 
performed by the Commission or by an existing advisory committee.
    (c) Upon receipt of the Administrator's notification of concurrence 
or nonconcurrence, the Commission shall publish a notice of the renewal 
in the Federal Register, which shall certify that the renewal of the 
advisory committee is in the public interest and shall include all the 
matters set forth in paragraph (b) of this section. The Commission shall 
cause a new charter to be prepared and filed in accordance with the 
provisions of Sec. Sec. 16.5 and 16.6 of this part.
    (d) No advisory committee that is required under this section to 
file a new charter for the purpose of renewal shall take any action, 
other than preparation and filing of such charter, between the date the 
new charter is required and the date on which such charter is actually 
filed.



Sec. 16.14  Amendments.

    (a) The charter of an advisory committee may be amended when the 
Commission determines that the existing charter no longer accurately 
describes the committee itself or its goals or procedures. Changes may 
be minor, such as revising the name of the advisory committee, or may be 
major, to the extent that they deal with the basic objectives or 
composition of the committee.
    (1) To make a minor amendment to an advisory committee charter, the 
Commission shall:
    (i) Amend the charter language as necessary; and
    (ii) File the amended charter in accordance with the provisions of 
Sec. 16.6 of this part.
    (2) To make a major amendment to an advisory committee charter, the 
Commission shall:
    (i) Amend the charter language as necessary;
    (ii) Submit the proposed amended charter with a letter to the 
Administrator requesting concurrence in the amended language and an 
explanation of why the changes are essential and in the public interest; 
and
    (iii) File the amended charter in accordance with the provisions of 
Sec. 16.6 of this part.
    (b) Amendment of an existing charter does not constitute renewal of 
the advisory committee under Sec. 16.13 of this part.

[[Page 135]]



Sec. 16.15  Reports of advisory committees.

    (a) The Commission shall furnish, on a fiscal year basis, a report 
of the activities of each of its advisory committees to the GSA.
    (b) Results of the annual comprehensive review of the advisory 
committee made under Sec. 16.11 shall be included in the annual report.
    (c) The Commission shall notify the GSA, by letter, of the 
termination of, changes in the membership of, or other significant 
developments with respect to, an advisory committee.



Sec. 16.16  Compensation.

    (a) Committee members. Unless otherwise provided by law, the 
Commission shall not compensate advisory committee members for their 
service on an advisory committee. In the exceptional case where the 
Commission is unable to meet the need for technical expertise or the 
requirement for balanced membership solely through the appointment of 
noncompensated members, the Commission may contract for or authorize the 
advisory committee to contract for the services of a specific consultant 
who may be appointed as a member of the advisory committee. In such a 
case, the Commission shall follow the procedures set forth in paragraph 
(b) of this section.
    (b) Consultants. Prior to hiring or authorizing the advisory 
committee to hire a consultant to an advisory committee, the Commission 
shall determine that the expertise or viewpoint to be offered by the 
consultant is not otherwise available without cost to the Commission. 
The compensation to be paid to such consultant may not exceed the 
maximum rate of pay authorized by 5 U.S.C. section 3109. Hiring of 
consultants shall be in accordance with OMB Circular A-120 and 
applicable statutes, regulations, and Executive Orders.
    (c) Staff members. The Commission may fix the pay of each advisory 
committee staff member at a rate of the General Schedule, General 
Management Schedule, or Senior Executive Service in which the Staff 
member's position would appropriately be placed (5 U.S.C. chapter 51). 
The Commission may not fix the pay of a staff member at a rate higher 
than the daily equivalent of the maximum rate for GS-15, unless the 
Commission has determined that under the General Schedule, General 
Management Schedule, or Senior Executive Service classification system, 
the staff member's position would appropriately be placed at a grade 
higher than GS-15. The Commission shall review this determination 
annually.

[[Page 136]]



              SUBCHAPTER B_GUIDES AND TRADE PRACTICE RULES





PART 17_APPLICATION OF GUIDES IN PREVENTING UNLAWFUL PRACTICES
--Table of Contents




    Note: Industry guides are administrative interpretations of laws 
administered by the Commission for the guidance of the public in 
conducting its affairs in conformity with legal requirements. They 
provide the basis for voluntary and simultaneous abandonment of unlawful 
practices by members of industry. Failure to comply with the guides may 
result in corrective action by the commission under applicable statutory 
provisions. Guides may relate to a practice common to many industries or 
to specific practices of a particular industry.
(Authority: Sec. 6(g), 38 Stat. 722; (15 U.S.C. 46(g))

[44 FR 11176, Feb. 27, 1979]



PART 18_GUIDES FOR THE NURSERY INDUSTRY--Table of Contents




Sec.
18.0 Definitions.
18.1 Deception (general).
18.2 Deception through use of names.
18.3 Substitution of products.
18.4 Size and grade designations.
18.5 Deception as to blooming, fruiting, or growing ability.
18.6 Plants collected from the wild state.
18.7 Misrepresentation as to character of business.
18.8 Deception as to origin or source of industry products.

    Authority: Secs. 5, 6 FTC Act; 38 Stat. 719, 721; 15 U.S.C. 45, 46.

    Source: 44 FR 11177, Feb. 27, 1979, unless otherwise noted.



Sec. 18.0  Definitions.

    Industry products. As used in this part, the term industry products 
includes all types of trees, small fruit plants, shrubs, vines, 
ornamentals, herbaceous annuals, biennials and perennials, bulbs, corms, 
rhizomes, and tubers which are offered for sale or sold to the general 
public. Included are products propagated sexually or asexually and 
whether grown in a commercial nursery or collected from the wild state. 
Such products are customarily used for outdoor planting. Not included 
are florists' or greenhouse plants solely for inside culture or use and 
annual vegetable plants.
    Industry members. Any person, firm, corporation, or organization 
engaged in the sale, offering for sale, or distribution in commerce of 
industry products, as defined above.
    Lining-out stock. Includes all plant material coming from 
propagating houses, beds, or frames, and young material such as 
seedlings rooted or unrooted cuttings, grafts or layers, of suitable 
size to transplant either in the nursery row or in containers for 
``growing on.''
    Nursery-propagated. Reproduced and grown under cultivation, 
including reproduced and grown under cultivation from plants, seeds or 
cuttings lawfully collected from the wild state.
    Propagated. Reproduced from seeds, cuttings, callus or other plant 
tissue, spores or other propagules under a controlled environment that 
is intensely manipulated by human intervention for the purpose of 
producing selected species or hybrids.

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.1  Deception (general).

    (a) It is an unfair or deceptive act or practice to sell, offer for 
sale, or distribute industry products by any method or under any 
circumstance or condition that misrepresents directly or by implication 
to purchasers or prospective purchasers the products with respect to 
quantity, size, grade, kind, species, age, maturity, condition, vigor, 
hardiness, number of times transplanted, growth ability, growth 
characteristics, rate of growth or time required before flowering or 
fruiting, price, origin or place where grown, or any other material 
aspect of the industry product.
    (b) The inhibitions of this section shall apply to every type of 
advertisement or method of representation, whether in newspaper, 
periodical, sales catalog, circular, by tag, label or insignia, by radio 
or television, by sales representatives, or otherwise.

[[Page 137]]

    (c) Among practices inhibited by the foregoing are direct or 
indirect representations:
    (1) That plants have been propagated by grafting or bud selection 
methods, when such is not the fact.
    (2) That industry products are healthy, will grow anywhere without 
the use of fertilizer, or will survive and produce without special care, 
when such is not the fact.
    (3) That plants will bloom the year round, or will bear an 
extraordinary number of blooms of unusual size or quality, when such is 
not the fact.
    (4) That an industry product is a new variety, when in fact it is a 
standard variety to which the industry member has given a new name.
    (5) That an industry product cannot be purchased through usual 
retail outlets, or that there are limited stocks available, when such is 
not the fact.
    (6) That industry products offered for sale will be delivered in 
time for the next (or any specified) seasonal planting when the industry 
member is aware of factors which make such delivery improbable.
    (7) That the appearance of an industry product as to size, color, 
contour, foliage, bloom, fruit or other physical characteristic is 
normal or usual when the appearance so represented is in fact abnormal 
or unusual.
    (8) That the root system of any plant is larger in depth or diameter 
than that which actually exists, whether accomplished by excessive 
packaging material, or excessive balling, or other deceptive or 
misleading practice.
    (9) That bublets are bulbs.
    (10) That an industry product is a rare or unusual item when such is 
not the fact. [Guide 1]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.2  Deception through use of names.

    (a) In the sale, offering for sale, or distribution of an industry 
product, it is an unfair or deceptive act or practice for any industry 
member to use a name for such product that misrepresents directly or by 
implication to purchasers or prospective purchasers its true identity.
    (b) Subject to the foregoing:
    (1) When an industry product has a generally recognized and well-
established common name, it is proper to use such name as a designation 
therefor, either alone or in conjunction with the correct botanical name 
of the product.
    (2) When an industry product has a generally recognized and well-
established common name, it is an unfair or deceptive act or practice 
for an industry member to adopt and use a new name for the product 
unless such new name is immediately accompanied by the generally 
recognized and well-established common name, or by the correct botanical 
name, or by a description of the nature and properties of the product 
which is of sufficient detail to prevent confusion and deception of 
purchasers or prospective purchasers as to the true identity of the 
product.
    (3) When an industry product does not have a generally recognized 
and well-established common name, and a name other than the correct 
botanical name of the product is applied thereto, such other name shall 
be immediately accompanied by either the correct botanical name of the 
product, or a description of the nature and properties of the product 
which is of sufficient detail as to prevent confusion and deception of 
purchasers and prospective purchasers as to the true identity of the 
product.

    Note: Industry recommendation. The industry recommends that in 
administering the guide in this section the Commission give 
consideration to the use of plant names listed in such works as 
Checklist of Woody Ornamental Plants of California, 1977, University of 
California; Hillier's Manual of Trees and Shrubs, 1971, Hillier & Sons; 
Manual of Cultivated Conifers, 1965, P. Den Ouden & B. K. Boom; Hortus 
III, 1976, L. H. Bailey Hortorium; Naming and Registering New Cultivars, 
1974, American Association of Nurserymen, Inc.; and to plant name lists 
periodically published by the plant societies and the horticultural 
organizations selected as international and national cultivar 
registration authorities as enumerated in Appendix of Naming and 
Registering New Cultivars.


[Guide 2]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]

[[Page 138]]



Sec. 18.3  Substitution of products.

    With respect to industry products offered for sale by an industry 
member, it is an unfair or deceptive act or practice for any member of 
the industry:
    (a) To ship or deliver industry products which do not conform to 
representations made prior to securing the order or to specifications 
upon which the sale is consummated, without advising the purchaser of 
the substitution and obtaining the purchaser's consent thereto prior to 
making shipment or delivery, where failure to advise would be misleading 
to purchasers; or
    (b) To falsely represent the reason for making a substitution: 
Provided, however, That nothing in this section is intended to inhibit 
the shipment of products different from those ordered, prior to 
obtaining the purchaser's consent to such substitution, when the order 
is received by the industry member near the close of the planting season 
for the products ordered and the substitution involved relates but to a 
product or products the total price of which is comparatively small, and 
when:
    (1) At the commencement of the planting season for the products 
ordered the industry member had a supply of such products sufficient to 
meet normal and reasonably expected orders therefor, and such supply has 
been exhausted; and
    (2) The products substituted are of similar variety and of equal or 
greater value to those ordered by the purchaser and no additional charge 
is made therefor; and
    (3) Notice of the substitution, with adequate identification of the 
substituted item or items, and with commitment of the industry member to 
refund any purchase price received for the substituted products if such 
products are not acceptable to the purchaser and to compensate the 
purchaser for any expense involved in the return of the substituted 
products if refund is conditioned on the return thereof, is given the 
purchaser at the time of his receipt of such products: And provided 
further, That nothing in this section is to be construed as sanctioning 
the dissemination of an advertisement of an industry product or products 
or the personal solicitation of orders therefor unless at the time of 
such dissemination or solicitation the industry member has a supply of 
such product or products sufficient to meet normal and reasonably 
expected orders therefor. [Guide 3]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.4  Size and grade designations.

    (a) In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for an industry 
member to use any term, designation, number, letter, mark, or symbol as 
a size or grade designation for any industry product in a manner or 
under any circumstance that misrepresents directly or by implication to 
purchasers or prospective purchasers the actual size or grade of such 
products.
    (b) Under this section industry members offering lining-out stock 
for sale shall specify conspicuously and accurately the size and age of 
such stock when failure to do so may misrepresent directly or by 
implication such stock to purchasers or prospective purchasers.
    (c) Nothing in this section is to be construed as inhibiting the 
designation of the size or grade of an industry product by use of a size 
or grade designation for which a standard has been established which is 
generally recognized in the industry when the identity of such standard 
is conjunctively disclosed, the product qualifies for the designation 
under such standard, and no deception of purchasers or prospective 
purchasers results in the use of such designation.

    Note: It is the consensus of the industry that the grade and size 
standard set forth in the current edition of American Standard for 
Nursery Stock, ANSI Z60.1, as approved by the American National Standard 
Institute, Inc., is generally recognized in the industry, and that use 
of the size and grade designation therein set forth, in accordance with 
the requirements of the standard for the designations, in the marketing 
of industry products to which such standard relates, will prevent 
deception and confusion of purchasers and prospective purchasers of such 
products. [Guide 4]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]

[[Page 139]]



Sec. 18.5  Deception as to blooming, fruiting, or growing ability.

    In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for any industry 
member to misrepresent directly or by implication to purchasers or 
prospective purchasers the ability of such products:
    (a) To bloom, flower, or fruit within a specified period of time; or
    (b) To produce crops within a specified period of time, or to give 
multiple crops each year, or to produce crops in unfavorable climatic 
regions; or
    (c) To bear fruit through self-pollinization; or
    (d) To grow, flourish, and survive irrespective of the climatic 
conditions, the care exercised in or after planting, or the soil 
characteristics of the locality in which they are to be planted.

    Note 1: Under this section, when flower bulbs are of such immaturity 
as not reasonably to be expected to bloom and flower the first season of 
their planting, such fact shall be clearly and conspicuously disclosed 
in all advertisements and sales promotional literature relating to such 
products: Provided, however, That such disclosure need not be made when 
sales are confined to nurseries and commercial growers for their use as 
planting stock.
    Note 2: Under this section, in order to avoid deception of 
purchasers and prospective purchasers thereof, when rose bushes have 
been used in a greenhouse for the commercial production of cut flowers, 
they shall be tagged or labeled so as to clearly, adequately and 
conspicuously disclose such fact, and such tags and labels shall be so 
attached thereto as to remain thereon until consummation of consumer 
sale. A similar disclosure shall be made in all advertising and sales 
promotional literature relating to such products. And when, by reason of 
such previous greenhouse use or their condition at the time of removal 
therefrom or their handling during or subsequent thereto, there is 
probability that such rose bushes will not satisfactorily thrive and 
produce flowers when replanted outdoors, or will satisfactorily thrive 
and produce flowers outdoors only if given special treatment and 
attention during and after their replanting, such fact shall also be 
clearly, conspicuously, and nondeceptively disclosed in close 
conjunction with, and in the same manner as, the aforesaid required 
disclosure that such products have been used in a greenhouse for the 
commercial production of cut flowers.


[Guide 5]

[44 FR 11177, Feb. 27, 1979, as amended at 59 FR 64549, Dec. 14, 1994]



Sec. 18.6  Plants collected from the wild state.

    It is an unfair or deceptive act or practice to sell, offer for 
sale, or distribute industry products collected from the wild state 
without disclosing that they were collected from the wild state; 
provided, however, that plants propagated in nurseries from plants 
lawfully collected from the wild state may be designated as ``nursery-
propagated.'' [Guide 6]

[59 FR 64549, Dec. 14, 1994]



Sec. 18.7  Misrepresentation as to character of business.

    (a) In the sale, offering for sale, or distribution of industry 
products, it is an unfair or deceptive act or practice for any industry 
member to represent itself directly or by implication to be a grower or 
propagator of such products, or any portion thereof, or to have any 
other experience or qualification either relating to the growing or 
propagation of such products or enabling the industry member to be of 
assistance to purchasers or prospective purchasers in the selection by 
them of the kinds or types of products, or the placement thereof, when 
such is not the fact, or in any other manner to misrepresent directly or 
by implication the character, nature, or extent of the industry member's 
business.

    Note: Among practices subject to the inhibitions of this section is 
a representation by an industry member to the effect that he is a 
landscape architect when his training, experience, and knowledge do not 
qualify him for such representation.

    (b) It is also an unfair or deceptive act or practice for an 
industry member to use the word ``guild,'' ``club,'' ``association,'' 
``council,'' ``society,'' ``foundation,'' or any other word of similar 
import or meaning, as part of a trade name, or otherwise, in such a 
manner or under such circumstances as to indicate or imply that its 
business is other than a commercial enterprise operated for profit, 
unless such be true in fact,

[[Page 140]]

or so as to deceive purchasers or prospective purchasers in any other 
material respect. [Guide 7]

[59 FR 64549, Dec. 14, 1994]



Sec. 18.8  Deception as to origin or source of industry products.

    (a) It is an unfair or deceptive act or practice to sell, offer for 
sale, or advertise an industry product by misrepresenting directly or by 
implication the origin or source of such product to purchasers or 
prospective purchasers (e.g., by use of the term Holland to describe 
bulbs grown in the U.S.A.); provided, however, that when a plant has an 
accepted common name that incorporates a geographical term and such term 
has lost its geographical significance as so used, the mere use of such 
common names does not constitute a misrepresentation as to source or 
origin (e.g., ``Colorado Blue Spruce,'' ``Arizona Cypress,'' ``Black 
Hills Spruce,'' ``California Privet,'' ``Japanese Barberry,'' etc.).
    (b) It is also an unfair or deceptive act or practice to advertise, 
sell, or offer for sale an industry product of foreign origin without 
adequate and non-deceptive disclosure of the name of the foreign country 
from which it came, where the failure to make such disclosure would be 
misleading to purchasers or prospective purchasers. [Guide 8]

[59 FR 64550, Dec. 14, 1994]



PART 20_GUIDES FOR THE REBUILT, RECONDITIONED AND OTHER USED AUTOMOBILE 
PARTS INDUSTRY--Table of Contents




Sec.
20.0 Scope and purpose of the guides.
20.1 Deception generally.
20.2 Deception as to identity of rebuilder, remanufacturer, 
          reconditioner or reliner.
20.3 Misrepresentation of the terms ``rebuilt,'' ``factory rebuilt,'' 
          ``remanufactured,'' etc.

    Authority: 15 U.S.C. 41-58.

    Source: 44 FR 11182, Feb. 27, 1979, unless otherwise noted.



Sec. 20.0  Scope and purpose of the guides.

    The Guides in this part apply to the manufacture, sale, 
distribution, marketing and advertising (including advertising in 
electronic format, such as on the Internet) of used parts and assemblies 
containing used parts designed for use in automobiles, trucks, 
motorcycles, tractors, or similar self-propelled vehicles whether or not 
such parts or assemblies have been reconstructed in any way (hereinafter 
``industry products''). Such automotive parts and assemblies include, 
but are not limited to, anti-lock brake systems, air conditioners, 
alternators, armatures, air brakes, brake cylinders, ball bearings, 
brake shoes, heavy duty vacuum brakes, calipers, carburetors, cruise 
controls, cylinder heads, clutches, crankshafts, constant velocity 
joints, differentials, drive shafts, distributors, electronic control 
modules, engines, fan clutches, fuel injectors, fuel pumps, front wheel 
drive axles, generators, master cylinders, oil pumps, power brake units, 
power steering gears, power steering pumps, power window motors, rack 
and pinion steering units, rotors, starter drives, speedometers, 
solenoids, smog pumps, starters, stators, throttle body injectors, 
torque convertors, transmissions, turbo chargers, voltage regulators, 
windshield wiper motors, and water pumps. Tires are not included. (Tires 
are covered by the Tire Advertising and Labeling Guides, 16 CFR Part 
228.)

[67 FR 9922, Mar. 5, 2002]



Sec. 20.1  Deception generally.

    (a) It is unfair or deceptive to represent, directly or by 
implication, that any industry product or part of an industry product is 
new or unused when such is not the fact, or to misrepresent the current 
condition, or extent of previous use, reconstruction or repair of any 
industry product.
    (b) It is unfair or deceptive to offer for sale or sell any industry 
product unless a clear and conspicuous disclosure that such product has 
been used or contains used parts is made in advertising, sales 
promotional literature and invoices and on product packaging. 
Additionally, it is unfair or deceptive to offer for sale or to sell any 
rebuilt, remanufactured, reconditioned, or otherwise new-appearing 
industry product unless such disclosure using appropriate descriptive 
terms is made on the

[[Page 141]]

product itself with sufficient permanency to remain visible for a 
reasonable period of time after installation. Examples of appropriate 
descriptive terms include, but are not limited to ``Used,'' 
``Secondhand,'' ``Repaired,'' ``Remanufactured,'' ``Reconditioned,'' 
``Rebuilt,'' or ``Relined.'' \1\ On invoices to the trade only, the 
disclosure may be made by use of any number, mark, or other symbol that 
is clearly understood by industry members as meaning that the products 
or parts identified on the invoices have been used.
---------------------------------------------------------------------------

    \1\ If the term ``recycled'' is used, it should be used in a manner 
consistent with the requirements for that term set forth in the Guides 
for the Use of Environmental Marketing Claims, 16 CFR 260.7(e).
---------------------------------------------------------------------------

    (c) It is unfair or deceptive to place any means or instrumentality 
in the hands of others so that they may mislead consumers as to the 
previous use of industry products or parts.

[67 FR 9922, Mar. 5, 2002]



Sec. 20.2  Deception as to identity of rebuilder, remanufacturer, 
reconditioner or reliner.

    (a) It is unfair or deceptive to misrepresent the identity of the 
rebuilder, remanufacturer, reconditioner or reliner of an industry 
product.
    (b) In connection with the sale or offering for sale of an industry 
product, if the identity of the original manufacturer of the product, or 
the identity of the manufacturer for which the product was originally 
made, is revealed and the product was rebuilt, remanufactured, 
reconditioned or relined by someone else, it is unfair or deceptive to 
fail to disclose such fact wherever the original manufacturer is 
identified in advertising and sales promotional literature concerning 
the product, on the container in which the product is packed, and on the 
product, in close conjunction with, and of the same permanency and 
conspicuousness as, the disclosure of previous use of the product 
described by this section. Examples of such disclosures include:
    (1) Disclosure of the identity of the rebuilder:

Rebuilt by John Doe Co.

    (2) Disclosure that the product was rebuilt by an independent 
rebuilder:

Rebuilt by an Independent Rebuilder.

    (3) Disclosure that the product was rebuilt by someone other than 
the manufacturer so identified:

Rebuilt by other than XYZ Motors.

    (4) Disclosure that the product was rebuilt for the identified 
manufacturer, if such is the case:

Rebuilt for XYZ Motors.

[67 FR 9922, Mar. 5, 2002]



Sec. 20.3  Misrepresentation of the terms ``rebuilt,'' ``factory 
rebuilt,'' ``remanufactured,'' etc.

    (a) It is unfair or deceptive to use the words ``Rebuilt,'' 
``Remanufactured,'' or words of similar import, to describe an industry 
product which, since it was last subjected to any use, has not been 
dismantled and reconstructed as necessary, all of its internal and 
external parts cleaned and made rust and corrosion free, all impaired, 
defective or substantially worn parts restored to a sound condition or 
replaced with new, rebuilt (in accord with the provisions of this 
paragraph) or unimpaired used parts, all missing parts replaced with 
new, rebuilt or unimpaired used parts, and such rewinding or machining 
and other operations performed as are necessary to put the industry 
product in sound working condition.
    (b) It is unfair or deceptive to represent an industry product as 
``Factory Rebuilt'' unless the product was rebuilt as described in 
paragraph (a) of this section at a factory generally engaged in the 
rebuilding of such products. (See also Sec. 20.2.)

[67 FR 9922, Mar. 5, 2002]



PART 23_GUIDES FOR THE JEWELRY, PRECIOUS METALS, AND PEWTER INDUSTRIES
--Table of Contents




Sec.
23.0 Scope and application.
23.1 Deception (general).
23.2 Misleading illustrations.
23.3 Misuse of the terms ``hand-made,'' ``hand-polished,'' etc.
23.4 Misrepresentation as to gold content.
23.5 Misuse of the word ``vermeil.''
23.6 Misrepresentation as to silver content.

[[Page 142]]

23.7 Misuse of the words ``platinum,'' ``iridium,'' ``palladium,'' 
          ``ruthenium,'' ``rhodium,'' and ``osmium.''
23.8 Misrepresentation as to content of pewter.
23.9 Additional guidance for the use of quality marks.
23.10 Misuse of ``corrosion proof,'' ``noncorrosive,'' ``corrosion 
          resistant,'' ``rust proof,'' ``rust resistant,'' etc.
23.11 Definition and misuse of the word ``diamond.''
23.12 Misuse of the words ``flawless,'' ``perfect,'' etc.
23.13 Disclosure of treatments to diamonds.
23.14 Misuse of the term ``blue white.''
23.15 Misuse of the term ``properly cut,'' etc.
23.16 Misuse of the words ``brilliant'' and ``full cut.''
23.17 Misrepresentation of weight and ``total weight.''
23.18 Definitions of various pearls.
23.19 Misuse of the word ``pearl.''
23.20 Misuse of terms such as ``cultured pearl,'' ``seed pearl,'' 
          ``Oriental pearl,'' ``natura,'' ``kultured,'' ``real,'' 
          ``gem,'' ``synthetic,'' and regional designations.
23.21 Misrepresentation as to cultured pearls.
23.22 Disclosure of treatment to gemstones.
23.23 Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,'' 
          ``topaz,'' ``stone,'' ``birthstone,'' ``gemstone,'' etc.
23.24 Misuse of the words ``real,'' ``genuine,'' ``natural,'' 
          ``precious,'' etc.
23.25 Misuse of the word ``gem.''
23.26 Misuse of the words ``flawless,'' ``perfect,'' etc.

Appendix to Part 23--Exemptions Recognized in the Assay for Quality of 
          Gold Alloy, Gold Filled, Gold Overlay, Rolled Gold Plate, 
          Silver, and Platinum Industry Products

    Authority: Sec. 6, 5, 38 Stat. 721, 719; 15 U.S.C. 46, 45.

    Source: 61 FR 27212, May 30, 1996, unless otherwise noted.



Sec. 23.0  Scope and application.

    (a) These guides apply to jewelry industry products, which include, 
but are not limited to, the following: gem stones and their laboratory-
created and imitation substitutes; natural and cultured pearls and their 
imitations; and metallic watch bands not permanently attached to 
watches. These guides also apply to articles, including optical frames, 
pens and pencils, flatware, and hollowware, fabricated from precious 
metals (gold, silver and platinum group metals), precious metal alloys, 
and their imitations. These guides also apply to all articles made from 
pewter. For the purposes of these guides, all articles covered by these 
guides are defined as ``industry products.''
    (b) These guides apply to persons, partnerships, or corporations, at 
every level of the trade (including but not limited to manufacturers, 
suppliers, and retailers) engaged in the business of offering for sale, 
selling, or distributing industry products.

    Note to paragraph (b):
    To prevent consumer deception, persons, partnerships, or 
corporations in the business of appraising, identifying, or grading 
industry products should utilize the terminology and standards set forth 
in the guides.

    (c) These guides apply to claims and representations about industry 
products included in labeling, advertising, promotional materials, and 
all other forms of marketing, whether asserted directly or by 
implication, through words, symbols, emblems, logos, illustrations, 
depictions, product brand names, or through any other means.

[61 FR 27212, May 30, 1996, as amended at 64 FR 33194, June 22, 1999]



Sec. 23.1  Deception (general).

    It is unfair or deceptive to misrepresent the type, kind, grade, 
quality, quantity, metallic content, size, weight, cut, color, 
character, treatment, substance, durability, serviceability, origin, 
price, value, preparation, production, manufacture, distribution, or any 
other material aspect of an industry product.

    Note 1 to Sec. 23.1: If, in the sale or offering for sale of an 
industry product, any representation is made as to the grade assigned 
the product, the identity of the grading system used should be 
disclosed.
    Note 2 to Sec. 23.1: To prevent deception, any qualifications or 
disclosures, such as those described in the guides, should be 
sufficiently clear and prominent. Clarity of language, relative type 
size and proximity to the claim being qualified, and an absence of 
contrary claims that could undercut effectiveness, will maximize the 
likelihood that the qualifications and disclosures are appropriately 
clear and prominent.



Sec. 23.2  Misleading illustrations.

    It is unfair or deceptive to use, as part of any advertisement, 
packaging

[[Page 143]]

material, label, or other sales promotion matter, any visual 
representation, picture, televised or computer image, illustration, 
diagram, or other depiction which, either alone or in conjunction with 
any accompanying words or phrases, misrepresents the type, kind, grade, 
quality, quantity, metallic content, size, weight, cut, color, 
character, treatment, substance, durability, serviceability, origin, 
preparation, production, manufacture, distribution, or any other 
material aspect of an industry product.

    Note to Sec. 23.2: An illustration or depiction of a diamond or 
other gemstone that portrays it in greater than its actual size may 
mislead consumers, unless a disclosure is made about the item's true 
size.



Sec. 23.3  Misuse of the terms ``hand-made,'' ``hand-polished,'' etc.

    (a) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is hand-made or hand-wrought 
unless the entire shaping and forming of such product from raw materials 
and its finishing and decoration were accomplished by hand labor and 
manually-controlled methods which permit the maker to control and vary 
the construction, shape, design, and finish of each part of each 
individual product.

    Note to paragraph (a):
    As used herein, ``raw materials'' include bulk sheet, strip, wire, 
and similar items that have not been cut, shaped, or formed into jewelry 
parts, semi-finished parts, or blanks.

    (b) It is unfair or deceptive to represent, directly or by 
implication, that any industry product is hand-forged, hand-engraved, 
hand-finished, or hand-polished, or has been otherwise hand-processed, 
unless the operation described was accomplished by hand labor and 
manually-controlled methods which permit the maker to control and vary 
the type, amount, and effect of such operation on each part of each 
individual product.



Sec. 23.4  Misrepresentation as to gold content.

    (a) It is unfair or deceptive to misrepresent the presence of gold 
or gold alloy in an industry product, or the quantity or karat fineness 
of gold or gold alloy contained in the product, or the karat fineness, 
thickness, weight ratio, or manner of application of any gold or gold 
alloy plating, covering, or coating on any surface of an industry 
product or part thereof.
    (b) The following are examples of markings or descriptions that may 
be misleading: \2\
---------------------------------------------------------------------------

    \2\ See Sec. 23.4(c) for examples of acceptable markings and 
descriptions.
---------------------------------------------------------------------------

    (1) Use of the word ``Gold'' or any abbreviation, without 
qualification, to describe all or part of an industry product, which is 
not composed throughout of fine (24 karat) gold.
    (2) Use of the word ``Gold'' or any abbreviation to describe all or 
part of an industry product composed throughout of an alloy of gold, 
unless a correct designation of the karat fineness of the alloy 
immediately precedes the word ``Gold'' or its abbreviation, and such 
fineness designation is of at least equal conspicuousness.
    (3) Use of the word ``Gold'' or any abbreviation to describe all or 
part of an industry product that is not composed throughout of gold or a 
gold alloy, but is surface-plated or coated with gold alloy, unless the 
word ``Gold'' or its abbreviation is adequately qualified to indicate 
that the product or part is only surface-plated.
    (4) Use of the term ``Gold Plate,'' ``Gold Plated,'' or any 
abbreviation to describe all or part of an industry product unless such 
product or part contains a surface-plating of gold alloy, applied by any 
process, which is of such thickness and extent of surface coverage that 
reasonable durability is assured.
    (5) Use of the terms ``Gold Filled,'' ``Rolled Gold Plate,'' 
``Rolled Gold Plated,'' ``Gold Overlay,'' or any abbreviation to 
describe all or part of an industry product unless such product or part 
contains a surface-plating of gold alloy applied by a mechanical process 
and of such thickness and extent of surface coverage that reasonable 
durability is assured, and unless the term is immediately preceded by a 
correct designation of the karat fineness of the alloy that is of at 
least equal conspicuousness as the term used.
    (6) Use of the terms ``Gold Plate,'' ``Gold Plated,'' ``Gold 
Filled,'' ``Rolled

[[Page 144]]

Gold Plate,'' ``Rolled Gold Plated,'' ``Gold Overlay,'' or any 
abbreviation to describe a product in which the layer of gold plating 
has been covered with a base metal (such as nickel), which is covered 
with a thin wash of gold, unless there is a disclosure that the primary 
gold coating is covered with a base metal, which is gold washed.
    (7) Use of the term ``Gold Electroplate,'' ``Gold Electroplated,'' 
or any abbreviation to describe all or part of an industry product 
unless such product or part is electroplated with gold or a gold alloy 
and such electroplating is of such karat fineness, thickness, and extent 
of surface coverage that reasonable durability is assured.
    (8) Use of any name, terminology, or other term to misrepresent that 
an industry product is equal or superior to, or different than, a known 
and established type of industry product with reference to its gold 
content or method of manufacture.
    (9) Use of the word ``Gold'' or any abbreviation, or of a quality 
mark implying gold content (e.g., 9 karat), to describe all or part of 
an industry product that is composed throughout of an alloy of gold of 
less than 10 karat fineness.

    Note to paragraph (b) Sec. 23.4:
    The provisions regarding the use of the word ``Gold,'' or any 
abbreviation, as described above, are applicable to ``Duragold,'' 
``Diragold,'' ``Noblegold,'' ``Goldine,'' ``Layered Gold,'' or any words 
or terms of similar meaning.

    (c) The following are examples of markings and descriptions that are 
consistent with the principles described above:
    (1) An industry product or part thereof, composed throughout of an 
alloy of gold of not less than 10 karat fineness, may be marked and 
described as ``Gold'' when such word ``Gold,'' wherever appearing, is 
immediately preceded by a correct designation of the karat fineness of 
the alloy, and such karat designation is of equal conspicuousness as the 
word ``Gold'' (for example, ``14 Karat Gold,'' ``14 K. Gold,'' or ``14 
Kt. Gold''). Such product may also be marked and described by a 
designation of the karat fineness of the gold alloy unaccompanied by the 
word ``Gold'' (for example, ``14 Karat,'' ``14 Kt.,'' or ``14 K.'').

    Note to paragraph (c)(1):
    Use of the term ``Gold'' or any abbreviation to describe all or part 
of a product that is composed throughout of gold alloy, but contains a 
hollow center or interior, may mislead consumers, unless the fact that 
the product contains a hollow center is disclosed in immediate proximity 
to the term ``Gold'' or its abbreviation (for example, ``14 Karat Gold-
Hollow Center,'' or ``14 K. Gold Tubing,'' when of a gold alloy tubing 
of such karat fineness). Such products should not be marked or described 
as ``solid'' or as being solidly of gold or of a gold alloy. For 
example, when the composition of such a product is 14 karat gold alloy, 
it should not be described or marked as either ``14 Kt. Solid Gold'' or 
as ``Solid 14 Kt. Gold.''

    (2) An industry product or part thereof, on which there has been 
affixed on all significant surfaces, by any process, a coating, 
electroplating, or deposition by any means, of gold or gold alloy of not 
less than 10 karat fineness that is of substantial thickness, \3\ and 
the minimum thickness throughout of which is equivalent to one-half 
micron (or approximately 20 millionths of an inch) of fine gold, \4\ may 
be marked or described as ``Gold Plate'' or ``Gold Plated,'' or 
abbreviated, as, for example, G.P. The exact thickness of the plate may 
be marked on the item, if it is immediately followed by a designation of 
the karat fineness of the plating which is of equal conspicuousness as 
the term used (as, for example, ``2 microns 12 K. gold plate'' or 
``2[mu] 12 K. G.P.'' for an item plated with 2 microns of 12 karat 
gold.)
---------------------------------------------------------------------------

    \3\ The term substantial thickness means that all areas of the 
plating are of such thickness as to assure a durable coverage of the 
base metal to which it has been affixed. Since industry products include 
items having surfaces and parts of surfaces that are subject to 
different degrees of wear, the thickness of plating for all items or for 
different areas of the surface of individual items does not necessarily 
have to be uniform.
    \4\ A product containing 1 micron (otherwise known as 1[mu]) of 12 
karat gold is equivalent to one-half micron of 24 karat gold.

    Note paragraph (c)(2) to paragraph (b):
    If an industry product has a thicker coating or electroplating of 
gold or gold alloy on some areas than others, the minimum thickness of 
the plate should be marked.

    (3) An industry product or part thereof on which there has been 
affixed on all significant surfaces by soldering,

[[Page 145]]

brazing, welding, or other mechanical means, a plating of gold alloy of 
not less than 10 karat fineness and of substantial thickness \5\ may be 
marked or described as ``Gold Filled,'' ``Gold Overlay,'' ``Rolled Gold 
Plate,'' or an adequate abbreviation, when such plating constitutes at 
least \1/20\th of the weight of the metal in the entire article and when 
the term is immediately preceded by a designation of the karat fineness 
of the plating which is of equal conspicuousness as the term used (for 
example, ``14 Karat Gold Filled,'' ``14 Kt. Gold Filled,'' ``14 Kt. 
G.F.,'' ``14 Kt. Gold Overlay,'' or ``14K. R.G.P.''). When conforming to 
all such requirements except the specified minimum of \1/20\th of the 
weight of the metal in the entire article, the terms ``Gold Overlay'' 
and ``Rolled Gold Plate'' may be used when the karat fineness 
designation is immediately preceded by a fraction accurately disclosing 
the portion of the weight of the metal in the entire article accounted 
for by the plating, and when such fraction is of equal conspicuousness 
as the term used (for example, ``\1/40\th 12 Kt. Rolled Gold Plate'' or 
``\1/40\ 12 Kt. R.G.P.'').
---------------------------------------------------------------------------

    \5\ See footnote 3.
---------------------------------------------------------------------------

    (4) An industry product or part thereof, on which there has been 
affixed on all significant surfaces by an electrolytic process, an 
electroplating of gold, or of a gold alloy of not less than 10 karat 
fineness, which has a minimum thickness throughout equivalent to .175 
microns (approximately \7\/1,000,000ths of an inch) of fine 
gold, may be marked or described as ``Gold Electroplate'' or ``Gold 
Electroplated,'' or abbreviated, as, for example, ``G.E.P.'' When the 
electroplating meets the minimum fineness but not the minimum thickness 
specified above, the marking or description may be ``Gold Flashed'' or 
``Gold Washed.'' When the electroplating is of the minimum fineness 
specified above and of a minimum thickness throughout equivalent to two 
and one half (2\1/2\) microns (or approximately \100\/
1,000,000ths of an inch) of fine gold, the marking or 
description may be ``Heavy Gold Electroplate'' or ``Heavy Gold 
Electroplated.'' When electroplatings qualify for the term ``Gold 
Electroplate'' (or ``Gold Electroplated''), or the term ``Heavy Gold 
Electroplate'' (or ``Heavy Gold Electroplated''), and have been applied 
by use of a particular kind of electrolytic process, the marking may be 
accompanied by identification of the process used, as for example, 
``Gold Electroplated (X Process)'' or ``Heavy Gold Electroplated (Y 
Process).''
    (d) The provisions of this section relating to markings and 
descriptions of industry products and parts thereof are subject to the 
applicable tolerances of the National Stamping Act or any amendment 
thereof. \6\
---------------------------------------------------------------------------

    \6\ Under the National Stamping Act, articles or parts made of gold 
or of gold alloy that contain no solder have a permissible tolerance of 
three parts per thousand. If the part tested contains solder, the 
permissible tolerance is seven parts per thousand. For full text, see 15 
U.S.C. 295, et seq.

    Note 4 to paragraph (d):
    Exemptions recognized in the assay of karat gold industry products 
and in the assay of gold filled, gold overlay, and rolled gold plate 
industry products, and not to be considered in any assay for quality, 
are listed in the appendix.



Sec. 23.5  Misuse of the word ``vermeil.''

    (a) It is unfair or deceptive to represent, directly or by 
implication, that an industry product is ``vermeil'' if such mark or 
description misrepresents the product's true composition.
    (b) An industry product may be described or marked as ``vermeil'' if 
it consists of a base of sterling silver coated or plated on all 
significant surfaces with gold, or gold alloy of not less than 10 karat 
fineness, that is of substantial thickness \7\ and a minimum thickness 
throughout equivalent to two and one half (2\1/2\) microns (or 
approximately \100\/1,000,000ths of an inch) of fine gold.
---------------------------------------------------------------------------

    \7\ See footnote 3.

    Note 1 to Sec. 23.5: It is unfair or deceptive to use the term 
``vermeil'' to describe a product in which the sterling silver has been 
covered with a base metal (such as nickel) plated with gold unless there 
is a disclosure that the sterling silver is covered with a base metal 
that is plated with gold.
    Note 2 to Sec. 23.5: Exemptions recognized in the assay of gold 
filled, gold overlay, and rolled gold plate industry products are listed 
in the appendix.

[[Page 146]]



Sec. 23.6  Misrepresentation as to silver content.

    (a) It is unfair or deceptive to misrepresent that an industry 
product contains silver, or to misrepresent an industry product as 
having a silver content, plating, electroplating, or coating.
    (b) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``silver,'' ``solid 
silver,'' ``Sterling Silver,'' ``Sterling,'' or the abbreviation 
``Ster.'' unless it is at least \925\/1,000ths pure silver.
    (c) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``coin'' or ``coin 
silver'' unless it is at least \900\/1,000ths pure silver.
    (d) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as being plated or coated 
with silver unless all significant surfaces of the product or part 
contain a plating or coating of silver that is of substantial thickness. 
\8\
---------------------------------------------------------------------------

    \8\ See footnote 3.
---------------------------------------------------------------------------

    (e) The provisions of this section relating to markings and 
descriptions of industry products and parts thereof are subject to the 
applicable tolerances of the National Stamping Act or any amendment 
thereof. \9\
---------------------------------------------------------------------------

    \9\ Under the National Stamping Act, sterling silver articles or 
parts that contain no solder have a permissible tolerance of four parts 
per thousand. If the part tested contains solder, the permissible 
tolerance is ten parts per thousand. For full text, see 15 U.S.C. 294, 
et seq.

    Note 1 to Sec. 23.6: The National Stamping Act provides that 
silverplated articles shall not ``be stamped, branded, engraved or 
imprinted with the word `sterling' or the word `coin,' either alone or 
in conjunction with other words or marks.'' 15 U.S.C. 297(a).
    Note 2 to Sec. 23.6: Exemptions recognized in the assay of silver 
industry products are listed in the appendix.



Sec. 23.7  Misuse of the words ``platinum,'' ``iridium,'' ``palladium,'' 
``ruthenium,'' ``rhodium,'' and ``osmium.''

    (a) It is unfair or deceptive to use the words ``platinum,'' 
``iridium,'' ``palladium,'' ``ruthenium,'' ``rhodium,'' and ``osmium,'' 
or any abbreviation to mark or describe all or part of an industry 
product if such marking or description misrepresents the product's true 
composition. The Platinum Group Metals (PGM) are Platinum, Iridium, 
Palladium, Ruthenium, Rhodium, and Osmium.
    (b) The following are examples of markings or descriptions that may 
be misleading: \10\
---------------------------------------------------------------------------

    \10\ See paragraph (c) of this section for examples of acceptable 
markings and descriptions.
---------------------------------------------------------------------------

    (1) Use of the word ``Platinum'' or any abbreviation, without 
qualification, to describe all or part of an industry product that is 
not composed throughout of 950 parts per thousand pure Platinum.
    (2) Use of the word ``Platinum'' or any abbreviation accompanied by 
a number indicating the parts per thousand of pure Platinum contained in 
the product without mention of the number of parts per thousand of other 
PGM contained in the product, to describe all or part of an industry 
product that is not composed throughout of at least 850 parts per 
thousand pure platinum, for example, ``600Plat.''
    (3) Use of the word ``Platinum'' or any abbreviation thereof, to 
mark or describe any product that is not composed throughout of at least 
500 parts per thousand pure Platinum.
    (c) The following are examples of markings and descriptions that are 
not considered unfair or deceptive:
    (1) The following abbreviations for each of the PGM may be used for 
quality marks on articles: ``Plat.'' or ``Pt.'' for Platinum; ``Irid.'' 
or ``Ir.'' for Iridium; ``Pall.'' or ``Pd.'' for Palladium; ``Ruth.'' or 
``Ru.'' for Ruthenium; ``Rhod.'' or ``Rh.'' for Rhodium; and ``Osmi.'' 
or ``Os.'' for Osmium.
    (2) An industry product consisting of at least 950 parts per 
thousand pure Platinum may be marked or described as ``Platinum.''
    (3) An industry product consisting of 850 parts per thousand pure 
Platinum, 900 parts per thousand pure Platinum, or 950 parts per 
thousand pure Platinum may be marked ``Platinum,'' provided that the 
Platinum marking is preceded by a number indicating the amount in parts 
per thousand of pure

[[Page 147]]

Platinum (for industry products consisting of 950 parts per thousand 
pure Platinum, the marking described in Sec. 23.7(b)(2) above is also 
appropriate). Thus, the following markings may be used: ``950Pt.,'' 
``950Plat.,'' ``900Pt.,'' ``900Plat.,'' ``850Pt.,'' or ``850Plat.''
    (4) An industry product consisting of at least 950 parts per 
thousand PGM, and of at least 500 parts per thousand pure Platinum, may 
be marked ``Platinum,'' provided that the mark of each PGM constituent 
is preceded by a number indicating the amount in parts per thousand of 
each PGM, as for example, ``600Pt.350Ir.,'' ``600Plat.350Irid.,'' or 
``550Pt.350Pd.50Ir.,'' ``550Plat.350Pall.50Irid.''

    Note to Sec. 23.7: Exemptions recognized in the assay of platinum 
industry products are listed in appendix A of this part.

[62 FR 16675, Apr. 8, 1997]



Sec. 23.8  Misrepresentation as to content of pewter.

    (a) It is unfair or deceptive to mark, describe, or otherwise 
represent all or part of an industry product as ``Pewter'' or any 
abbreviation if such mark or description misrepresents the product's 
true composition.
    (b) An industry product or part thereof may be described or marked 
as ``Pewter'' or any abbreviation if it consists of at least 900 parts 
per 1000 Grade A Tin, with the remainder composed of metals appropriate 
for use in pewter.



Sec. 23.9  Additional guidance for the use of quality marks.

    As used in these guides, the term quality mark means any letter, 
figure, numeral, symbol, sign, word, or term, or any combination 
thereof, that has been stamped, embossed, inscribed, or otherwise placed 
on any industry product and which indicates or suggests that any such 
product is composed throughout of any precious metal or any precious 
metal alloy or has a surface or surfaces on which there has been plated 
or deposited any precious metal or precious metal alloy. Included are 
the words ``gold,'' ``karat,'' ``carat,'' ``silver,'' ``sterling,'' 
``vermeil,'' ``platinum,'' ``iridium,'' ``palladium,'' ``ruthenium,'' 
``rhodium,'' or ``osmium,'' or any abbreviations thereof, whether used 
alone or in conjunction with the words ``filled,'' ``plated,'' 
``overlay,'' or ``electroplated,'' or any abbreviations thereof. Quality 
markings include those in which the words or terms ``gold,'' ``karat,'' 
``silver,'' ``vermeil,'' ``platinum'' (or platinum group metals), or 
their abbreviations are included, either separately or as suffixes, 
prefixes, or syllables.
    (a) Deception as to applicability of marks. (1) If a quality mark on 
an industry product is applicable to only part of the product, the part 
of the product to which it is applicable (or inapplicable) should be 
disclosed when, absent such disclosure, the location of the mark 
misrepresents the product or part's true composition.
    (2) If a quality mark is applicable to only part of an industry 
product, but not another part which is of similar surface appearance, 
each quality mark should be closely accompanied by an identification of 
the part or parts to which the mark is applicable.
    (b) Deception by reason of difference in the size of letters or 
words in a marking or markings. It is unfair or deceptive to place a 
quality mark on a product in which the words or letters appear in 
greater size than other words or letters of the mark, or when different 
markings placed on the product have different applications and are in 
different sizes, when the net impression of any such marking would be 
misleading as to the metallic composition of all or part of the product. 
(An example of improper marking would be the marking of a gold 
electroplated product with the word ``electroplate'' in small type and 
the word ``gold'' in larger type, with the result that purchasers and 
prospective purchasers of the product might only observe the word 
``gold.'')

    Note 1 to Sec. 23.9: Legibility of markings. If a quality mark is 
engraved or stamped on an industry product, or is printed on a tag or 
label attached to the product, the quality mark should be of sufficient 
size type as to be legible to persons of normal vision, should be so 
placed as likely to be observed by purchasers, and should be so attached 
as to remain thereon until consumer purchase.
    Note 2 to Sec. 23.9: Disclosure of identity of manufacturers, 
processors, or distributors. The National Stamping Act provides that any 
person, firm, corporation, or association, being a manufacturer or 
dealer subject to

[[Page 148]]

section 294 of the Act, who applies or causes to be applied a quality 
mark, or imports any article bearing a quality mark ``which indicates or 
purports to indicate that such article is made in whole or in part of 
gold or silver or of an alloy of either metal'' shall apply to the 
article the trademark or name of such person. 15 U.S.C. 297.



Sec. 23.10  Misuse of ``corrosion proof,'' ``noncorrosive,'' 
``corrosion resistant,'' ``rust proof,'' ``rust resistant,'' etc.

    (a) It is unfair or deceptive to:
    (1) Use the terms ``corrosion proof,'' ``noncorrosive,'' ``rust 
proof,'' or any other term of similar meaning to describe an industry 
product unless all parts of the product will be immune from rust and 
other forms of corrosion during the life expectancy of the product; or
    (2) Use the terms ``corrosion resistant,'' ``rust resistant,'' or 
any other term of similar meaning to describe an industry product unless 
all parts of the product are of such composition as to not be subject to 
material damage by corrosion or rust during the major portion of the 
life expectancy of the product under normal conditions of use.
    (b) Among the metals that may be considered as corrosion (and rust) 
resistant are: Pure nickel; Gold alloys of not less than 10 Kt. 
fineness; and Austenitic stainless steels.



Sec. 23.11  Definition and misuse of the word ``diamond.''

    (a) A diamond is a natural mineral consisting essentially of pure 
carbon crystallized in the isometric system. It is found in many colors. 
Its hardness is 10; its specific gravity is approximately 3.52; and it 
has a refractive index of 2.42.
    (b) It is unfair or deceptive to use the unqualified word 
``diamond'' to describe or identify any object or product not meeting 
the requirements specified in the definition of diamond provided above, 
or which, though meeting such requirements, has not been symmetrically 
fashioned with at least seventeen (17) polished facets.

    Note 1 to paragraph (b):
    It is unfair or deceptive to represent, directly or by implication, 
that industrial grade diamonds or other non-jewelry quality diamonds are 
of jewelry quality.

    (c) The following are examples of descriptions that are not 
considered unfair or deceptive:
    (1) The use of the words ``rough diamond'' to describe or designate 
uncut or unfaceted objects or products satisfying the definition of 
diamond provided above; or
    (2) The use of the word ``diamond'' to describe or designate objects 
or products satisfying the definition of diamond but which have not been 
symmetrically fashioned with at least seventeen (17) polished facets 
when in immediate conjunction with the word ``diamond'' there is either 
a disclosure of the number of facets and shape of the diamond or the 
name of a type of diamond that denotes shape and that usually has less 
than seventeen (17) facets (e.g., ``rose diamond'').

    Note 2 to paragraph (c):
    Additional guidance about imitation and laboratory-created diamond 
representations and misuse of words ``gem,'' ``real,'' ``genuine,'' 
``natural,'' etc., are set forth in Sec. Sec. 23.23, 23.24, and 23.25.



Sec. 23.12  Misuse of the words ``flawless,'' ``perfect,'' etc.

    (a) It is unfair or deceptive to use the word ``flawless'' to 
describe any diamond that discloses flaws, cracks, inclusions, carbon 
spots, clouds, internal lasering, or other blemishes or imperfections of 
any sort when examined under a corrected magnifier at 10-power, with 
adequate illumination, by a person skilled in diamond grading.
    (b) It is unfair or deceptive to use the word ``perfect,'' or any 
representation of similar meaning, to describe any diamond unless the 
diamond meets the definition of ``flawless'' and is not of inferior 
color or make.
    (c) It is unfair or deceptive to use the words ``flawless'' or 
``perfect'' to describe a ring or other article of jewelry having a 
``flawless'' or ``perfect'' principal diamond or diamonds, and 
supplementary stones that are not of such quality, unless there is a 
disclosure that the description applies only to the principal diamond or 
diamonds.



Sec. 23.13  Disclosure of treatments to diamonds

    A diamond is a gemstone product. Treatments to diamonds should be 
disclosed in the manner prescribed in

[[Page 149]]

Sec. 23.22 of these guides, Disclosure of treatments to gemstones.

[65 FR 78743, Dec. 15, 2000]



Sec. 23.14  Misuse of the term ``blue white.''

    It is unfair or deceptive to use the term ``blue white'' or any 
representation of similar meaning to describe any diamond that under 
normal, north daylight or its equivalent shows any color or any trace of 
any color other than blue or bluish.



Sec. 23.15  Misuse of the term ``properly cut,'' etc.

    It is unfair or deceptive to use the terms ``properly cut,'' 
``proper cut,'' ``modern cut,'' or any representation of similar meaning 
to describe any diamond that is lopsided, or is so thick or so thin in 
depth as to detract materially from the brilliance of the stone.

    Note to Sec. 23.15: Stones that are commonly called ``fisheye'' or 
``old mine'' should not be described as ``properly cut,'' ``modern 
cut,'' etc.



Sec. 23.16  Misuse of the words ``brilliant'' and ``full cut.''

    It is unfair or deceptive to use the unqualified expressions 
``brilliant,'' ``brilliant cut,'' or ``full cut'' to describe, identify, 
or refer to any diamond except a round diamond that has at least thirty-
two (32) facets plus the table above the girdle and at least twenty-four 
(24) facets below.

    Note to Sec. 23.16: Such terms should not be applied to single or 
rose-cut diamonds. They may be applied to emerald-(rectangular) cut, 
pear-shaped, heart-shaped, oval-shaped, and marquise-(pointed oval) cut 
diamonds meeting the above-stated facet requirements when, in immediate 
conjunction with the term used, the form of the diamond is disclosed.



Sec. 23.17  Misrepresentation of weight and ``total weight.''

    (a) It is unfair or deceptive to misrepresent the weight of a 
diamond.
    (b) It is unfair or deceptive to use the word ``point'' or any 
abbreviation in any representation, advertising, marking, or labeling to 
describe the weight of a diamond, unless the weight is also stated as 
decimal parts of a carat (e.g., 25 points or .25 carat).

    Note 1 to paragraph (b):
    A carat is a standard unit of weight for a diamond and is equivalent 
to 200 milligrams (\1/5\ gram). A point is one one hundredth (\1/100\) 
of a carat.

    (c) If diamond weight is stated as decimal parts of a carat (e.g., 
.47 carat), the stated figure should be accurate to the last decimal 
place. If diamond weight is stated to only one decimal place (e.g., .5 
carat), the stated figure should be accurate to the second decimal place 
(e.g., ``.5 carat'' could represent a diamond weight between .495-.504).
    (d) If diamond weight is stated as fractional parts of a carat, a 
conspicuous disclosure of the fact that the diamond weight is not exact 
should be made in close proximity to the fractional representation and a 
disclosure of a reasonable range of weight for each fraction (or the 
weight tolerance being used) should also be made.

    Note to paragraph (d):
    When fractional representations of diamond weight are made, as 
described in paragraph d of this section, in catalogs or other printed 
materials, the disclosure of the fact that the actual diamond weight is 
within a specified range should be made conspicuously on every page 
where a fractional representation is made. Such disclosure may refer to 
a chart or other detailed explanation of the actual ranges used. For 
example, ``Diamond weights are not exact; see chart on p.X for ranges.''



Sec. 23.18  Definitions of various pearls.

    As used in these guides, the terms set forth below have the 
following meanings:
    (a) Pearl: A calcareous concretion consisting essentially of 
alternating concentric layers of carbonate of lime and organic material 
formed within the body of certain mollusks, the result of an abnormal 
secretory process caused by an irritation of the mantle of the mollusk 
following the intrusion of some foreign body inside the shell of the 
mollusk, or due to some abnormal physiological condition in the mollusk, 
neither of which has in any way been caused or induced by humans.
    (b) Cultured pearl: The composite product created when a nucleus 
(usually a sphere of calcareous mollusk shell) planted by humans inside 
the shell or in the mantle of a mollusk is coated with nacre by the 
mollusk.

[[Page 150]]

    (c) Imitation pearl: A manufactured product composed of any material 
or materials that simulate in appearance a pearl or cultured pearl.
    (d) Seed pearl: A small pearl, as defined in (a), that measures 
approximately two millimeters or less.



Sec. 23.19  Misuse of the word ``pearl.''

    (a) It is unfair or deceptive to use the unqualified word ``pearl'' 
or any other word or phrase of like meaning to describe, identify, or 
refer to any object or product that is not in fact a pearl, as defined 
in Sec. 23.18(a).
    (b) It is unfair or deceptive to use the word ``pearl'' to describe, 
identify, or refer to a cultured pearl unless it is immediately 
preceded, with equal conspicuousness, by the word ``cultured'' or 
``cultivated,'' or by some other word or phrase of like meaning, so as 
to indicate definitely and clearly that the product is not a pearl.
    (c) It is unfair or deceptive to use the word ``pearl'' to describe, 
identify, or refer to an imitation pearl unless it is immediately 
preceded, with equal conspicuousness, by the word ``artificial,'' 
``imitation,'' or ``simulated,'' or by some other word or phrase of like 
meaning, so as to indicate definitely and clearly that the product is 
not a pearl.
    (d) It is unfair or deceptive to use the terms ``faux pearl,'' 
``fashion pearl,'' ``Mother of Pearl,'' or any other such term to 
describe or qualify an imitation pearl product unless it is immediately 
preceded, with equal conspicuousness, by the word ``artificial,'' 
``imitation,'' or ``simulated,'' or by some other word or phrase of like 
meaning, so as to indicate definitely and clearly that the product is 
not a pearl.



Sec. 23.20  Misuse of terms such as ``cultured pearl,'' ``seed pearl,'' 

``Oriental pearl,'' ``natura,'' ``kultured,'' ``real,'' ``gem,'' 
``synthetic,'' and 
          regional designations.

    (a) It is unfair or deceptive to use the term ``cultured pearl,'' 
``cultivated pearl,'' or any other word, term, or phrase of like meaning 
to describe, identify, or refer to any imitation pearl.
    (b) It is unfair or deceptive to use the term ``seed pearl'' or any 
word, term, or phrase of like meaning to describe, identify, or refer to 
a cultured or an imitation pearl, without using the appropriate 
qualifying term ``cultured'' (e.g., ``cultured seed pearl'') or 
``simulated,'' ``artificial,'' or ``imitation'' (e.g., ``imitation seed 
pearl'').
    (c) It is unfair or deceptive to use the term ``Oriental pearl'' or 
any word, term, or phrase of like meaning to describe, identify, or 
refer to any industry product other than a pearl taken from a salt water 
mollusk and of the distinctive appearance and type of pearls obtained 
from mollusks inhabiting the Persian Gulf and recognized in the jewelry 
trade as Oriental pearls.
    (d) It is unfair or deceptive to use the word ``Oriental'' to 
describe, identify, or refer to any cultured or imitation pearl.
    (e) It is unfair or deceptive to use the word ``natura,'' 
``natural,'' ``nature's,'' or any word, term, or phrase of like meaning 
to describe, identify, or refer to a cultured or imitation pearl. It is 
unfair or deceptive to use the term ``organic'' to describe, identify, 
or refer to an imitation pearl, unless the term is qualified in such a 
way as to make clear that the product is not a natural or cultured 
pearl.
    (f) It is unfair or deceptive to use the term ``kultured,'' ``semi-
cultured pearl,'' ``cultured-like,'' ``part-cultured,'' ``pre-mature 
cultured pearl,'' or any word, term, or phrase of like meaning to 
describe, identify, or refer to an imitation pearl.
    (g) It is unfair or deceptive to use the term ``South Sea pearl'' 
unless it describes, identifies, or refers to a pearl that is taken from 
a salt water mollusk of the Pacific Ocean South Sea Islands, Australia, 
or Southeast Asia. It is unfair or deceptive to use the term ``South Sea 
cultured pearl'' unless it describes, identifies, or refers to a 
cultured pearl formed in a salt water mollusk of the Pacific Ocean South 
Sea Islands, Australia, or Southeast Asia.
    (h) It is unfair or deceptive to use the term ``Biwa cultured 
pearl'' unless it describes, identifies, or refers to cultured pearls 
grown in fresh water mollusks in the lakes and rivers of Japan.

[[Page 151]]

    (i) It is unfair or deceptive to use the word ``real,'' ``genuine,'' 
``precious,'' or any word, term, or phrase of like meaning to describe, 
identify, or refer to any imitation pearl.
    (j) It is unfair or deceptive to use the word ``gem'' to describe, 
identify, or refer to a pearl or cultured pearl that does not possess 
the beauty, symmetry, rarity, and value necessary for qualification as a 
gem.

    Note to paragraph (j):
    Use of the word ``gem'' with respect to cultured pearls should be 
avoided since few cultured pearls possess the necessary qualifications 
to properly be termed ``gems.'' Imitation pearls should not be described 
as ``gems.''

    (k) It is unfair or deceptive to use the word ``synthetic'' or 
similar terms to describe cultured or imitation pearls.
    (l) It is unfair or deceptive to use the terms ``Japanese Pearls,'' 
``Chinese Pearls,'' ``Mallorca Pearls,'' or any regional designation to 
describe, identify, or refer to any cultured or imitation pearl, unless 
the term is immediately preceded, with equal conspicuousness, by the 
word ``cultured,'' ``artificial,'' ``imitation,'' or ``simulated,'' or 
by some other word or phrase of like meaning, so as to indicate 
definitely and clearly that the product is a cultured or imitation 
pearl.



Sec. 23.21  Misrepresentation as to cultured pearls.

    It is unfair or deceptive to misrepresent the manner in which 
cultured pearls are produced, the size of the nucleus artificially 
inserted in the mollusk and included in cultured pearls, the length of 
time that such products remained in the mollusk, the thickness of the 
nacre coating, the value and quality of cultured pearls as compared with 
the value and quality of pearls and imitation pearls, or any other 
material matter relating to the formation, structure, properties, 
characteristics, and qualities of cultured pearls.



Sec. 23.22  Disclosure of treatments to gemstones.

    It is unfair or deceptive to fail to disclose that a gemstone has 
been treated if:
    (a) The treatment is not permanent. The seller should disclose that 
the gemstone has been treated and that the treatment is or may not be 
permanent;
    (b) The treatment creates special care requirements for the 
gemstone. The seller should disclose that the gemstone has been treated 
and has special care requirements. It is also recommended that the 
seller disclose the special care requirements to the purchaser;
    (c) The treatment has a significant effect on the stone's value. The 
seller should disclose that the gemstone has been treated.
    Note to Sec. 23.22: The disclosures outlined in this section are 
applicable to sellers at every level of trade, as defined in Sec. 
23.0(b) of these Guides, and they may be made at the point of sale prior 
to sale; except that where a jewelry product can be purchased without 
personally viewing the product, (e.g., direct mail catalogs, online 
services, televised shopping programs) disclosure should be made in the 
solicitation for or description of the product.

[65 FR 78743, Dec. 15, 2000]



Sec. 23.23  Misuse of the words ``ruby,'' ``sapphire,'' ``emerald,'' 
``topaz,'' ``stone,'' ``birthstone,'' ``gemstone,'' etc.

    (a) It is unfair or deceptive to use the unqualified words ``ruby,'' 
``sapphire,'' ``emerald,'' ``topaz,'' or the name of any other precious 
or semi-precious stone to describe any product that is not in fact a 
natural stone of the type described.
    (b) It is unfair or deceptive to use the word ``ruby,'' 
``sapphire,'' ``emerald,'' ``topaz,'' or the name of any other precious 
or semi-precious stone, or the word ``stone,'' ``birthstone,'' 
``gemstone,'' or similar term to describe a laboratory-grown, 
laboratory-created, [manufacturer name]-created, synthetic, imitation, 
or simulated stone, unless such word or name is immediately preceded 
with equal conspicuousness by the word ``laboratory-grown,'' 
``laboratory-created,'' ``[manufacturer name]-created,'' ``synthetic,'' 
or by the word ``imitation'' or ``simulated,'' so as to disclose clearly 
the nature of the product and the fact it is not a natural gemstone.

    Note to paragraph (h):
    The use of the word ``faux'' to describe a laboratory-created or 
imitation stone is not an adequate disclosure that the stone is not 
natural.


[[Page 152]]


    (c) It is unfair or deceptive to use the word ``laboratory-grown,'' 
``laboratory-created,'' ``[manufacturer name]-created,'' or 
``synthetic'' with the name of any natural stone to describe any 
industry product unless such industry product has essentially the same 
optical, physical, and chemical properties as the stone named.



Sec. 23.24  Misuse of the words ``real,'' ``genuine,'' ``natural,'' 
``precious,'' etc.

    It is unfair or deceptive to use the word ``real,'' ``genuine,'' 
``natural,'' ``precious,'' ``semi-precious,'' or similar terms to 
describe any industry product that is manufactured or produced 
artificially.



Sec. 23.25  Misuse of the word ``gem.''

    (a) It is unfair or deceptive to use the word ``gem'' to describe, 
identify, or refer to a ruby, sapphire, emerald, topaz, or other 
industry product that does not possess the beauty, symmetry, rarity, and 
value necessary for qualification as a gem.
    (b) It is unfair or deceptive to use the word ``gem'' to describe 
any laboratory-created industry product unless the product meets the 
requirements of paragraph (a) of this section and unless such word is 
immediately accompanied, with equal conspicuousness, by the word 
``laboratory-grown,'' ``laboratory-created,'' or ``[manufacturer-name]-
created,'' ``synthetic,'' or by some other word or phrase of like 
meaning, so as to clearly disclose that it is not a natural gem.

    Note to Sec. 23.25: In general, use of the word ``gem'' with 
respect to laboratory-created stones should be avoided since few 
laboratory-created stones possess the necessary qualifications to 
properly be termed ``gems.'' Imitation diamonds and other imitation 
stones should not be described as ``gems.'' Not all diamonds or natural 
stones, including those classified as precious stones, possess the 
necessary qualifications to be properly termed ``gems.''



Sec. 23.26  Misuse of the words ``flawless,'' ``perfect,'' etc.

    (a) It is unfair or deceptive to use the word ``flawless'' as a 
quality description of any gemstone that discloses blemishes, 
inclusions, or clarity faults of any sort when examined under a 
corrected magnifier at 10-power, with adequate illumination, by a person 
skilled in gemstone grading.
    (b) It is unfair or deceptive to use the word ``perfect'' or any 
representation of similar meaning to describe any gemstone unless the 
gemstone meets the definition of ``flawless'' and is not of inferior 
color or make.
    (c) It is unfair or deceptive to use the word ``flawless,'' 
``perfect,'' or any representation of similar meaning to describe any 
imitation gemstone.

 Appendix to Part 23--Exemptions Recognized in the Assay for Quality of 
 Gold Alloy, Gold Filled, Gold Overlay, Rolled Gold Plate, Silver, and 
                       Platinum Industry Products

    (a) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a karat gold industry product include 
springs, posts, and separable backs of lapel buttons, posts and nuts for 
attaching interchangeable ornaments, metallic parts completely and 
permanently encased in a nonmetallic covering, field pieces and bezels 
for lockets, \1\ and wire pegs or rivets used for applying mountings and 
other ornaments, which mountings or ornaments shall be of the quality 
marked.
---------------------------------------------------------------------------

    \1\ Field pieces of lockets are those inner portions used as frames 
between the inside edges of the locket and the spaces for holding 
pictures. Bezels are the separable inner metal rings to hold the 
pictures in place.

    Note: Exemptions recognized in the industry and not to be considered 
in any assay for quality of a karat gold optical product include: the 
hinge assembly (barrel or other special types such as are customarily 
used in plastic frames); washers, bushings, and nuts of screw 
assemblies; dowels; springs for spring shoe straps; metal parts 
permanently encased in a non-metallic covering; and for oxfords, \2\ 
coil and joint springs.
---------------------------------------------------------------------------

    \2\ Oxfords are a form of eyeglasses where a flat spring joins the 
two eye rims and the tension it exerts on the nose serves to hold the 
unit in place. Oxfords are also referred to as pince nez.

    (b) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a gold filled, gold overlay and rolled gold 
plate industry product, other than watchcases, include joints, catches, 
screws, pin stems, pins of scarf pins, hat pins, etc., field pieces and 
bezels for lockets, posts and separate backs of lapel buttons, bracelet 
and necklace snap tongues, springs,

[[Page 153]]

and metallic parts completely and permanently encased in a nonmetallic 
---------------------------------------------------------------------------
covering.

    Note: Exemptions recognized in the industry and not to be considered 
in any assay for quality of a gold filled, gold overlay and rolled gold 
plate optical product include: screws; the hinge assembly (barrel or 
other special types such as are customarily used in plastic frames); 
washers, bushings, tubes and nuts of screw assemblies; dowels; pad 
inserts; springs for spring shoe straps, cores and/or inner windings of 
comfort cable temples; metal parts permanently encased in a non-metallic 
covering; and for oxfords, the handle and catch.

    (c) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a silver industry product include screws, 
rivets, springs, spring pins for wrist watch straps; posts and separable 
backs of lapel buttons; wire pegs, posts, and nuts used for applying 
mountings or other ornaments, which mountings or ornaments shall be of 
the quality marked; pin stems (e.g., of badges, brooches, emblem pins, 
hat pins, and scarf pins, etc.); levers for belt buckles; blades and 
skeletons of pocket knives; field pieces and bezels for lockets; 
bracelet and necklace snap tongues; any other joints, catches, or 
screws; and metallic parts completely and permanently encased in a 
nonmetallic covering.
    (d) Exemptions recognized in the industry and not to be considered 
in any assay for quality of an industry product of silver in combination 
with gold include joints, catches, screws, pin stems, pins of scarf 
pins, hat pins, etc., posts and separable backs of lapel buttons, 
springs, and metallic parts completely and permanently encased in a 
nonmetallic covering.
    (e) Exemptions recognized in the industry and not to be considered 
in any assay for quality of a platinum industry product include springs, 
winding bars, sleeves, crown cores, mechanical joint pins, screws, 
rivets, dust bands, detachable movement rims, hat-pin stems, and 
bracelet and necklace snap tongues. In addition, the following 
exemptions are recognized for products marked in accordance with section 
23.8(b)(5) of these Guides (i.e., products that are less than 500 parts 
per thousand platinum): pin tongues, joints, catches, lapel button backs 
and the posts to which they are attached, scarf-pin stems, hat pin 
sockets, shirt-stud backs, vest-button backs, and ear-screw backs, 
provided such parts are made of the same quality platinum as is used in 
the balance of the article.



PART 24_GUIDES FOR SELECT LEATHER AND IMITATION LEATHER PRODUCTS
--Table of Contents




Sec.
24.0 Scope and purpose of guides.
24.1 Deception (general).
24.2 Deception as to composition.
24.3 Misuse of the terms ``waterproof,'' ``dustproof,'' ``warpproof,'' 
          ``scuffproof,'' ``scratchproof,'' ``scuff resistant,'' or 
          ``scratch resistant.''

    Authority: 15 U.S.C. 45, 46.

    Source: 61 FR 51583, Oct. 3, 1996, unless otherwise noted.



Sec. 24.0  Scope and purpose of guides.

    (a) The Guides in this part apply to the manufacture, sale, 
distribution, marketing, or advertising of all kinds or types of leather 
or simulated-leather trunks, suitcases, traveling bags, sample cases, 
instrument cases, brief cases, ring binders, billfolds, wallets, key 
cases, coin purses, card cases, French purses, dressing cases, stud 
boxes, tie cases, jewel boxes, travel kits, gadget bags, camera bags, 
ladies' handbags, shoulder bags, purses, pocketbooks, footwear, belts 
(when not sold as part of a garment) and similar articles (hereinafter, 
``industry products'').
    (b) These Guides represent administrative interpretations of laws 
administered by the Federal Trade Commission for the guidance of the 
public in conducting its affairs in conformity with legal requirements. 
These Guides specifically address the application of section 5 of the 
FTC Act (15 U.S.C. 45) to the manufacture, sale, distribution, 
marketing, and advertising of industry products listed in paragraph (a) 
of this section. They provide the basis for voluntary compliance with 
such laws by members of industry. Conduct inconsistent with the 
positions articulated in these Guides may result in corrective action by 
the Commission under section 5 if, after investigation, the Commission 
has reason to believe that the behavior falls within the scope of 
conduct declared unlawful by the statute.



Sec. 24.1  Deception (general).

    It is unfair or deceptive to misrepresent, directly or by 
implication, the

[[Page 154]]

kind, grade, quality, quantity, material content, thickness, finish, 
serviceability, durability, price, origin, size, weight, ease of 
cleaning, construction, manufacture, processing, distribution, or any 
other material aspect of an industry product.



Sec. 24.2  Deception as to composition.

    It is unfair or deceptive to misrepresent, directly or by 
implication, the composition of any industry product or part thereof. It 
is unfair or deceptive to use the unqualified term ``leather'' or other 
unqualified terms suggestive of leather to describe industry products 
unless the industry product so described is composed in all substantial 
parts of leather. \1\ This section includes, but is not limited to, the 
following:
---------------------------------------------------------------------------

    \1\ For purposes of these Guides, footwear is composed of three 
parts: the upper, the lining and sock, and the outersole. These three 
parts are defined as follows: (1) The upper is the outer face of the 
structural element which is attached to the outersole; (2) the lining 
and sock are the lining of the upper and the insole, constituting the 
inside of the footwear article; and (3) the outersole is the bottom part 
of the footwear article subjected to abrasive wear and attached to the 
upper.
---------------------------------------------------------------------------

    (a) Imitation or simulated leather. If all or part of an industry 
product is made of non-leather material that appears to be leather, the 
fact that the material is not leather, or the general nature of the 
material as something other than leather, should be disclosed. For 
example: Not leather; Imitation leather; Simulated leather; Vinyl; Vinyl 
coated fabric; or Plastic.
    (b) Embossed or processed leather. The kind and type of leather from 
which an industry product is made should be disclosed when all or part 
of the product has been embossed, dyed, or otherwise processed so as to 
simulate the appearance of a different kind or type of leather. For 
example:
    (1) An industry product made wholly of top grain cowhide that has 
been processed so as to imitate pigskin may be represented as being made 
of Top Grain Cowhide.
    (2) Any additional representation concerning the simulated 
appearance of an industry product composed of leather should be 
immediately accompanied by a disclosure of the kind and type of leather 
in the product. For example: Top Grain Cowhide With Simulated Pigskin 
Grain.
    (c) Backing material. (1) The backing of any material in an industry 
product with another kind of material should be disclosed when the 
backing is not apparent upon casual inspection of the product, or when a 
representation is made which, absent such disclosure, would be 
misleading as to the product's composition. For example: Top Grain 
Cowhide Backed With Vinyl.
    (2) The composition of the different backing material should be 
disclosed if it is visible and consists of non-leather material with the 
appearance of leather, or leather processed so as to simulate a 
different kind of leather.
    (d) Misuse of trade names, etc. A trade name, coined name, 
trademark, or other word or term, or any depiction or device should not 
be used if it misrepresents, directly or by implication, that an 
industry product is made in whole or in part from animal skin or hide, 
or that material in an industry product is leather or other material. 
This includes, among other practices, the use of a stamp, tag, label, 
card, or other device in the shape of a tanned hide or skin or in the 
shape of a silhouette of an animal, in connection with any industry 
product that has the appearance of leather but that is not made wholly 
or in substantial part from animal skin or hide.
    (e) Misrepresentation that product is wholly of a particular 
composition. A misrepresentation should not be made, directly or by 
implication, that an industry product is made wholly of a particular 
composition. A representation as to the composition of a particular part 
of a product should clearly indicate the part to which the 
representation applies.\2\ Where a product is made principally of 
leather but has certain non-leather parts that appear to be leather, the 
product may be described

[[Page 155]]

as made of leather so long as accompanied by clear disclosure of the 
non-leather parts. For example:
---------------------------------------------------------------------------

    \2\ With regard to footwear, it is sufficient to disclose the 
presence of non-leather materials in the upper, the lining and sock, or 
the outersole, provided that the disclosure is made according to 
predominance of materials. For example, if the majority of the upper is 
composed of manmade material: Upper of manmade materials and leather.
---------------------------------------------------------------------------

    (1) An industry product made of top grain cowhide except for frame 
covering, gussets, and partitions that are made of plastic but have the 
appearance of leather may be described as: Top Grain Cowhide With 
Plastic Frame Covering, Gussets and Partitions; or Top Grain Cowhide 
With Gussets, Frame Covering and Partitions Made of Non-Leather 
Material.
    (2) An industry product made throughout, except for hardware, of 
vinyl backed with cowhide may be described as: Vinyl Backed With Cowhide 
(See also disclosure provision concerning use of backing material in 
paragraph (c) of this section).
    (3) An industry product made of top grain cowhide except for 
partitions and stay, which are made of plastic-coated fabric but have 
the appearance of leather, may be described as: Top Grain Cowhide With 
Partitions and Stay Made of Non-leather Material; or Top Grain Cowhide 
With Partitions and Stay Made of Plastic-Coated Fabric.
    (f) Ground, pulverized, shredded, reconstituted, or bonded leather. 
A material in an industry product that contains ground, pulverized, 
shredded, reconstituted, or bonded leather and thus is not wholly the 
hide of an animal should not be represented, directly or by implication, 
as being leather. This provision does not preclude an accurate 
representation as to the ground, pulverized, shredded, reconstituted, or 
bonded leather content of the material. However, if the material appears 
to be leather, it should be accompanied by either:
    (1) An adequate disclosure as described by paragraph (a) of this 
section; or
    (2) If the terms ``ground leather,'' ``pulverized leather,'' 
``shredded leather,'' ``reconstituted leather,'' or ``bonded leather'' 
are used, a disclosure of the percentage of leather fibers and the 
percentage of non-leather substances contained in the material. For 
example: An industry product made of a composition material consisting 
of 60% shredded leather fibers may be described as: Bonded Leather 
Containing 60% Leather Fibers and 40% Non-leather Substances.
    (g) Form of disclosures under this section. All disclosures 
described in this section should appear in the form of a stamping on the 
product, or on a tag, label, or card attached to the product, and should 
be affixed so as to remain on or attached to the product until received 
by the consumer purchaser. All such disclosures should also appear in 
all advertising of such products irrespective of the media used whenever 
statements, representations, or depictions appear in such advertising 
which, absent such disclosures, serve to create a false impression that 
the products, or parts thereof, are of a certain kind of composition. 
The disclosures affixed to products and made in advertising should be of 
such conspicuousness and clarity as to be noted by purchasers and 
prospective purchasers casually inspecting the products or casually 
reading, or listening to, such advertising. A disclosure necessitated by 
a particular representation should be in close conjunction with the 
representation.



Sec. 24.3  Misuse of the terms ``waterproof,'' ``dustproof,'' 

``warpproof,'' ``scuffproof,'' ``scratchproof,'' ``scuff resistant,'' 
and ``scratch resistant.''

    It is unfair or deceptive to:
    (a) Use the term ``Waterproof'' to describe all or part of an 
industry product unless the designated product or material prevents 
water from contact with its contents under normal conditions of intended 
use during the anticipated life of the product or material.
    (b) Use the term ``Dustproof'' to describe an industry product 
unless the product is so constructed that when it is closed dust cannot 
enter it.
    (c) Use the term ``Warpproof'' to describe all or part of an 
industry product unless the designated product or part is such that it 
cannot warp.
    (d) Use the term ``Scuffproof,'' ``Scratchproof,'' or other terms 
indicating that the product is not subject to wear in any other respect, 
to describe an industry product unless the outside surface of the 
product is immune to scratches or scuff marks, or is not subject to wear 
as represented.
    (e) Use the term ``Scuff Resistant,'' ``Scratch Resistant,'' or 
other terms

[[Page 156]]

indicating that the product is resistant to wear in any other respect, 
unless there is a basis for the representation and the outside surface 
of the product is meaningfully and significantly resistant to scuffing, 
scratches, or to wear as represented.

                         PARTS 25-227 [RESERVED]



PART 233_GUIDES AGAINST DECEPTIVE PRICING--Table of Contents




Sec.
233.1 Former price comparisons.
233.2 Retail price comparisons; comparable value comparisons.
233.3 Advertising retail prices which have been established or suggested 
          by manufacturers (or other nonretail distributors).
233.4 Bargain offers based upon the purchase of other merchandise.
233.5 Miscellaneous price comparisons.

    Authority: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 
46.

    Source: 32 FR 15534, Nov. 8, 1967, unless otherwise noted.



Sec. 233.1  Former price comparisons.

    (a) One of the most commonly used forms of bargain advertising is to 
offer a reduction from the advertiser's own former price for an article. 
If the former price is the actual, bona fide price at which the article 
was offered to the public on a regular basis for a reasonably 
substantial period of time, it provides a legitimate basis for the 
advertising of a price comparison. Where the former price is genuine, 
the bargain being advertised is a true one. If, on the other hand, the 
former price being advertised is not bona fide but fictitious--for 
example, where an artificial, inflated price was established for the 
purpose of enabling the subsequent offer of a large reduction--the 
``bargain'' being advertised is a false one; the purchaser is not 
receiving the unusual value he expects. In such a case, the ``reduced'' 
price is, in reality, probably just the seller's regular price.
    (b) A former price is not necessarily fictitious merely because no 
sales at the advertised price were made. The advertiser should be 
especially careful, however, in such a case, that the price is one at 
which the product was openly and actively offered for sale, for a 
reasonably substantial period of time, in the recent, regular course of 
his business, honestly and in good faith--and, of course, not for the 
purpose of establishing a fictitious higher price on which a deceptive 
comparison might be based. And the advertiser should scrupulously avoid 
any implication that a former price is a selling, not an asking price 
(for example, by use of such language as, ``Formerly sold at $------''), 
unless substantial sales at that price were actually made.
    (c) The following is an example of a price comparison based on a 
fictitious former price. John Doe is a retailer of Brand X fountain 
pens, which cost him $5 each. His usual markup is 50 percent over cost; 
that is, his regular retail price is $7.50. In order subsequently to 
offer an unusual ``bargain'', Doe begins offering Brand X at $10 per 
pen. He realizes that he will be able to sell no, or very few, pens at 
this inflated price. But he doesn't care, for he maintains that price 
for only a few days. Then he ``cuts'' the price to its usual level--
$7.50--and advertises: ``Terrific Bargain: X Pens, Were $10, Now Only 
$7.50!'' This is obviously a false claim. The advertised ``bargain'' is 
not genuine.
    (d) Other illustrations of fictitious price comparisons could be 
given. An advertiser might use a price at which he never offered the 
article at all; he might feature a price which was not used in the 
regular course of business, or which was not used in the recent past but 
at some remote period in the past, without making disclosure of that 
fact; he might use a price that was not openly offered to the public, or 
that was not maintained for a reasonable length of time, but was 
immediately reduced.
    (e) If the former price is set forth in the advertisement, whether 
accompanied or not by descriptive terminology such as ``Regularly,'' 
``Usually,'' ``Formerly,'' etc., the advertiser should make certain that 
the former price is not a fictitious one. If the former price, or the 
amount or percentage of reduction, is not stated in the advertisement, 
as when the ad merely states, ``Sale,'' the advertiser must take care 
that the amount of reduction

[[Page 157]]

is not so insignificant as to be meaningless. It should be sufficiently 
large that the consumer, if he knew what it was, would believe that a 
genuine bargain or saving was being offered. An advertiser who claims 
that an item has been ``Reduced to $9.99,'' when the former price was 
$10, is misleading the consumer, who will understand the claim to mean 
that a much greater, and not merely nominal, reduction was being 
offered. [Guide I]



Sec. 233.2  Retail price comparisons; comparable value comparisons.

    (a) Another commonly used form of bargain advertising is to offer 
goods at prices lower than those being charged by others for the same 
merchandise in the advertiser's trade area (the area in which he does 
business). This may be done either on a temporary or a permanent basis, 
but in either case the advertised higher price must be based upon fact, 
and not be fictitious or misleading. Whenever an advertiser represents 
that he is selling below the prices being charged in his area for a 
particular article, he should be reasonably certain that the higher 
price he advertises does not appreciably exceed the price at which 
substantial sales of the article are being made in the area--that is, a 
sufficient number of sales so that a consumer would consider a reduction 
from the price to represent a genuine bargain or saving. Expressed 
another way, if a number of the principal retail outlets in the area are 
regularly selling Brand X fountain pens at $10, it is not dishonest for 
retailer Doe to advertise: ``Brand X Pens, Price Elsewhere $10, Our 
Price $7.50''.
    (b) The following example, however, illustrates a misleading use of 
this advertising technique. Retailer Doe advertises Brand X pens as 
having a ``Retail Value $15.00, My Price $7.50,'' when the fact is that 
only a few small suburban outlets in the area charge $15. All of the 
larger outlets located in and around the main shopping areas charge 
$7.50, or slightly more or less. The advertisement here would be 
deceptive, since the price charged by the small suburban outlets would 
have no real significance to Doe's customers, to whom the advertisement 
of ``Retail Value $15.00'' would suggest a prevailing, and not merely an 
isolated and unrepresentative, price in the area in which they shop.
    (c) A closely related form of bargain advertising is to offer a 
reduction from the prices being charged either by the advertiser or by 
others in the advertiser's trade area for other merchandise of like 
grade and quality--in other words, comparable or competing merchandise--
to that being advertised. Such advertising can serve a useful and 
legitimate purpose when it is made clear to the consumer that a 
comparison is being made with other merchandise and the other 
merchandise is, in fact, of essentially similar quality and obtainable 
in the area. The advertiser should, however, be reasonably certain, just 
as in the case of comparisons involving the same merchandise, that the 
price advertised as being the price of comparable merchandise does not 
exceed the price at which such merchandise is being offered by 
representative retail outlets in the area. For example, retailer Doe 
advertises Brand X pen as having ``Comparable Value $15.00''. Unless a 
reasonable number of the principal outlets in the area are offering 
Brand Y, an essentially similar pen, for that price, this advertisement 
would be deceptive. [Guide II]



Sec. 233.3  Advertising retail prices which have been established or 
suggested by manufacturers (or other nonretail distributors).

    (a) Many members of the purchasing public believe that a 
manufacturer's list price, or suggested retail price, is the price at 
which an article is generally sold. Therefore, if a reduction from this 
price is advertised, many people will believe that they are being 
offered a genuine bargain. To the extent that list or suggested retail 
prices do not in fact correspond to prices at which a substantial number 
of sales of the article in question are made, the advertisement of a 
reduction may mislead the consumer.
    (b) There are many methods by which manufacturers' suggested retail 
or list prices are advertised: Large scale (often nationwide) mass-media 
advertising by the manufacturer himself; preticketing by the 
manufacturer; direct mail advertising; distribution of

[[Page 158]]

promotional material or price lists designed for display to the public. 
The mechanics used are not of the essence. This part is concerned with 
any means employed for placing such prices before the consuming public.
    (c) There would be little problem of deception in this area if all 
products were invariably sold at the retail price set by the 
manufacturer. However, the widespread failure to observe manufacturers' 
suggested or list prices, and the advent of retail discounting on a wide 
scale, have seriously undermined the dependability of list prices as 
indicators of the exact prices at which articles are in fact generally 
sold at retail. Changing competitive conditions have created a more 
acute problem of deception than may have existed previously. Today, only 
in the rare case are all sales of an article at the manufacturer's 
suggested retail or list price.
    (d) But this does not mean that all list prices are fictitious and 
all offers of reductions from list, therefore, deceptive. Typically, a 
list price is a price at which articles are sold, if not everywhere, 
then at least in the principal retail outlets which do not conduct their 
business on a discount basis. It will not be deemed fictitious if it is 
the price at which substantial (that is, not isolated or insignificant) 
sales are made in the advertiser's trade area (the area in which he does 
business). Conversely, if the list price is significantly in excess of 
the highest price at which substantial sales in the trade area are made, 
there is a clear and serious danger of the consumer being misled by an 
advertised reduction from this price.
    (e) This general principle applies whether the advertiser is a 
national or regional manufacturer (or other non-retail distributor), a 
mail-order or catalog distributor who deals directly with the consuming 
public, or a local retailer. But certain differences in the 
responsibility of these various types of businessmen should be noted. A 
retailer competing in a local area has at least a general knowledge of 
the prices being charged in his area. Therefore, before advertising a 
manufacturer's list price as a basis for comparison with his own lower 
price, the retailer should ascertain whether the list price is in fact 
the price regularly charged by principal outlets in his area.
    (f) In other words, a retailer who advertises a manufacturer's or 
distributor's suggested retail price should be careful to avoid creating 
a false impression that he is offering a reduction from the price at 
which the product is generally sold in his trade area. If a number of 
the principal retail outlets in the area are regularly engaged in making 
sales at the manufacturer's suggested price, that price may be used in 
advertising by one who is selling at a lower price. If, however, the 
list price is being followed only by, for example, small suburban 
stores, house-to-house canvassers, and credit houses, accounting for 
only an insubstantial volume of sales in the area, advertising of the 
list price would be deceptive.
    (g) On the other hand, a manufacturer or other distributor who does 
business on a large regional or national scale cannot be required to 
police or investigate in detail the prevailing prices of his articles 
throughout so large a trade area. If he advertises or disseminates a 
list or preticketed price in good faith (i.e., as an honest estimate of 
the actual retail price) which does not appreciably exceed the highest 
price at which substantial sales are made in his trade area, he will not 
be chargeable with having engaged in a deceptive practice. Consider the 
following example:
    (h) Manufacturer Roe, who makes Brand X pens and sells them 
throughout the United States, advertises his pen in a national magazine 
as having a ``Suggested Retail Price $10,'' a price determined on the 
basis of a market survey. In a substantial number of representative 
communities, the principal retail outlets are selling the product at 
this price in the regular course of business and in substantial volume. 
Roe would not be considered to have advertised a fictitious ``suggested 
retail price.'' If retailer Doe does business in one of these 
communities, he would not be guilty of a deceptive practice by 
advertising, ``Brand X Pens, Manufacturer's Suggested Retail Price, $10, 
Our Price, $7.50.''
    (i) It bears repeating that the manufacturer, distributor or 
retailer must in every case act honestly and in good

[[Page 159]]

faith in advertising a list price, and not with the intention of 
establishing a basis, or creating an instrumentality, for a deceptive 
comparison in any local or other trade area. For instance, a 
manufacturer may not affix price tickets containing inflated prices as 
an accommodation to particular retailers who intend to use such prices 
as the basis for advertising fictitious price reductions. [Guide III]



Sec. 233.4  Bargain offers based upon the purchase of other merchandise.

    (a) Frequently, advertisers choose to offer bargains in the form of 
additional merchandise to be given a customer on the condition that he 
purchase a particular article at the price usually offered by the 
advertiser. The forms which such offers may take are numerous and 
varied, yet all have essentially the same purpose and effect. 
Representative of the language frequently employed in such offers are 
``Free,'' ``Buy One--Get One Free,'' ``2-For-1 Sale,'' ``Half Price 
Sale,'' ``1[cent] Sale,'' ``50% Off,'' etc. Literally, of course, the 
seller is not offering anything ``free'' (i.e., an unconditional gift), 
or \1/2\ free, or for only 1[cent], when he makes such an offer, since 
the purchaser is required to purchase an article in order to receive the 
``free'' or ``1[cent]'' item. It is important, therefore, that where 
such a form of offer is used, care be taken not to mislead the consumer.
    (b) Where the seller, in making such an offer, increases his regular 
price of the article required to be bought, or decreases the quantity 
and quality of that article, or otherwise attaches strings (other than 
the basic condition that the article be purchased in order for the 
purchaser to be entitled to the ``free'' or ``1[cent]'' additional 
merchandise) to the offer, the consumer may be deceived.
    (c) Accordingly, whenever a ``free,'' ``2-for-1,'' ``half price 
sale,'' ``1[cent] sale,'' ``50% off'' or similar type of offer is made, 
all the terms and conditions of the offer should be made clear at the 
outset. [Guide IV]



Sec. 233.5  Miscellaneous price comparisons.

    The practices covered in the provisions set forth above represent 
the most frequently employed forms of bargain advertising. However, 
there are many variations which appear from time to time and which are, 
in the main, controlled by the same general principles. For example, 
retailers should not advertise a retail price as a ``wholesale'' price. 
They should not represent that they are selling at ``factory'' prices 
when they are not selling at the prices paid by those purchasing 
directly from the manufacturer. They should not offer seconds or 
imperfect or irregular merchandise at a reduced price without disclosing 
that the higher comparative price refers to the price of the merchandise 
if perfect. They should not offer an advance sale under circumstances 
where they do not in good faith expect to increase the price at a later 
date, or make a ``limited'' offer which, in fact, is not limited. In all 
of these situations, as well as in others too numerous to mention, 
advertisers should make certain that the bargain offer is genuine and 
truthful. Doing so will serve their own interest as well as that of the 
public. [Guide V]



PART 238_GUIDES AGAINST BAIT ADVERTISING--Table of Contents




Sec.
238.0 Bait advertising defined.
238.1 Bait advertisement.
238.2 Initial offer.
238.3 Discouragement of purchase of advertised merchandise.
238.4 Switch after sale.

    Authority: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 
46.

    Source: 32 FR 15540, Nov. 8, 1967, unless otherwise noted.



Sec. 238.0  Bait advertising defined. \1\

---------------------------------------------------------------------------

    \1\ For the purpose of this part ``advertising'' includes any form 
of public notice however disseminated or utilized.
---------------------------------------------------------------------------

    Bait advertising is an alluring but insincere offer to sell a 
product or service which the advertiser in truth does not intend or want 
to sell. Its purpose is to switch consumers from buying the advertised 
merchandise, in order to sell something else, usually at a higher price 
or on a basis more advantageous to the advertiser. The primary aim of a 
bait advertisement is to obtain leads as

[[Page 160]]

to persons interested in buying merchandise of the type so advertised.



Sec. 238.1  Bait advertisement.

    No advertisement containing an offer to sell a product should be 
published when the offer is not a bona fide effort to sell the 
advertised product. [Guide 1]



Sec. 238.2  Initial offer.

    (a) No statement or illustration should be used in any advertisement 
which creates a false impression of the grade, quality, make, value, 
currency of model, size, color, usability, or origin of the product 
offered, or which may otherwise misrepresent the product in such a 
manner that later, on disclosure of the true facts, the purchaser may be 
switched from the advertised product to another.
    (b) Even though the true facts are subsequently made known to the 
buyer, the law is violated if the first contact or interview is secured 
by deception. [Guide 2]



Sec. 238.3  Discouragement of purchase of advertised merchandise.

    No act or practice should be engaged in by an advertiser to 
discourage the purchase of the advertised merchandise as part of a bait 
scheme to sell other merchandise. Among acts or practices which will be 
considered in determining if an advertisement is a bona fide offer are:
    (a) The refusal to show, demonstrate, or sell the product offered in 
accordance with the terms of the offer,
    (b) The disparagement by acts or words of the advertised product or 
the disparagement of the guarantee, credit terms, availability of 
service, repairs or parts, or in any other respect, in connection with 
it,
    (c) The failure to have available at all outlets listed in the 
advertisement a sufficient quantity of the advertised product to meet 
reasonably anticipated demands, unless the advertisement clearly and 
adequately discloses that supply is limited and/or the merchandise is 
available only at designated outlets,
    (d) The refusal to take orders for the advertised merchandise to be 
delivered within a reasonable period of time,
    (e) The showing or demonstrating of a product which is defective, 
unusable or impractical for the purpose represented or implied in the 
advertisement,
    (f) Use of a sales plan or method of compensation for salesmen or 
penalizing salesmen, designed to prevent or discourage them from selling 
the advertised product. [Guide 3]



Sec. 238.4  Switch after sale.

    No practice should be pursued by an advertiser, in the event of sale 
of the advertised product, of ``unselling'' with the intent and purpose 
of selling other merchandise in its stead. Among acts or practices which 
will be considered in determining if the initial sale was in good faith, 
and not a strategem to sell other merchandise, are:
    (a) Accepting a deposit for the advertised product, then switching 
the purchaser to a higher-priced product,
    (b) Failure to make delivery of the advertised product within a 
reasonable time or to make a refund,
    (c) Disparagement by acts or words of the advertised product, or the 
disparagement of the guarantee, credit terms, availability of service, 
repairs, or in any other respect, in connection with it,
    (d) The delivery of the advertised product which is defective, 
unusable or impractical for the purpose represented or implied in the 
advertisement. [Guide 4]

    Note: Sales of advertised merchandise. Sales of the advertised 
merchandise do not preclude the existence of a bait and switch scheme. 
It has been determined that, on occasions, this is a mere incidental 
byproduct of the fundamental plan and is intended to provide an aura of 
legitimacy to the overall operation.



PART 239_GUIDES FOR THE ADVERTISING OF WARRANTIES AND GUARANTEES
--Table of Contents




Sec.
239.1 Purpose and scope of the guides.
239.2 Disclosures in warranty or guarantee advertising.
239.3 ``Satisfaction Guarantees'' and similar representations in 
          advertising; disclosure in advertising that mentions 
          ``satisfaction guarantees'' or similar representations.

[[Page 161]]

239.4 ``Lifetime'' and similar representations.
239.5 Performance of warranties or guarantees.

    Authority: Secs. 5, 6, 38 Stat. 719 as amended, 721; 15 U.S.C. 45, 
46.

    Source: 50 FR 18470, May 1, 1985, unless otherwise noted.



Sec. 239.1  Purpose and scope of the guides.

    The Guides for the Advertising of Warranties and Guarantees are 
intended to help advertisers avoid unfair or deceptive practices in the 
advertising of warranties or guarantees. The Guides are based upon 
Commission cases, and reflect changes in circumstances brought about by 
the Magnuson-Moss Warranty Act (15 U.S.C. 2301 et seq.) and the FTC 
Rules promulgated pursuant to the Act (16 CFR parts 701 and 702). The 
Guides do not purport to anticipate all possible unfair or deceptive 
acts or practices in the advertising of warranties or guarantees and the 
Guides should not be interpreted to limit the Commission's authority to 
proceed against such acts or practices under section 5 of the Federal 
Trade Commission Act. The Commission may bring an action under section 5 
against any advertiser who misrepresents the product or service offered, 
who misrepresents the terms or conditions of the warranty offered, or 
who employs other deceptive or unfair means.
    Section 239.2 of the Guides applies only to advertisements for 
written warranties on consumer products, as ``written warranty'' and 
``consumer product'' are defined in the Magnuson-Moss Warranty Act, 15 
U.S.C. 2301, that are covered by the Rule on Pre-Sale Availability or 
Written Warranty Terms, 16 CFR part 702. The other sections of the 
Guides apply to the advertising of any warranty or guarantee.

[50 FR 18470, May 1, 1985; 50 FR 20899, May 21, 1985]



Sec. 239.2  Disclosures in warranty or guarantee advertising.

    (a) If an advertisement mentions a warranty or guarantee that is 
offered on the advertised product, the advertisement should disclose, 
with such clarity and prominence as will be noticed and understood by 
prospective purchasers, that prior to sale, at the place where the 
product is sold, prospective purchasers can see the written warranty or 
guarantee for complete details of the warranty coverage. \1\
---------------------------------------------------------------------------

    \1\ In television advertising, the Commission will regard any 
disclosure of the pre-sale availability of warranties as complying with 
this Guide if the advertisement makes the necessary disclosure 
simultaneously with or immediately following the warranty claim and the 
disclosure is made in the audio portion, or, if in the video portion, it 
remains on the screen for at least five seconds.

    Examples: The following are examples of disclosures sufficient to 
convey to prospective purchasers that, prior to sale, at the place where 
the product is sold, they can see the written warranty or guarantee for 
complete details of the warranty coverage. These examples are for both 
print and broadcast advertising. These examples are illustrative, not 
exhaustive. In each example, the portion of the advertisement that 
mentions the warranty or guarantee is in regular type and the disclosure 
is in italics.
    A. ``The XYZ washing machine is backed by our limited 1 year 
warranty. For complete details, see our warranty at a dealer near you.''
    B. ``The XYZ bicycle is warranted for 5 years. Some restrictions may 
apply. See a copy of our warranty wherever XYZ products are sold.''
    C. ``We offer the best guarantee in the business. Read the details 
and compare wherever our fine products are sold.''
    D. ``See our full 2 year warranty at the store nearest you.''
    E. ``Don't take our word--take our warranty. See our limited 2 year 
warranty where you shop.''

    (b) If an advertisement in any catalogue, or in any other 
solicitation \2\ for mail order sales or for telephone order sales 
mentions a warranty or guarantee that is offered on the advertised 
product, the advertisement should disclose, with such clarity and 
prominence as will be noticed and understood by prospective purchasers, 
that prospective purchasers can obtain complete details of the written 
warranty or guarantee free from the seller upon specific written request 
or from the catalogue or other solicitation (whichever is applicable).
---------------------------------------------------------------------------

    \2\ See note 1.

    Examples: The following are examples of disclosures sufficient to 
convey to consumers how they can obtain complete details of the

[[Page 162]]

written warranty or guarantee prior to placing a mail or telephone 
order. These examples are illustrative, not exhaustive. In each example, 
the portion of the advertisement that mentions the warranty or guarantee 
is in regular typeface and the disclosure is in italics.
    A. ``ABC quality cutlery is backed by our 10 year warranty. Write to 
us for a free copy at: (address).''
    B. ``ABC power tools are guaranteed. Read about our limited 90 day 
warranty in this catalogue.''
    C. ``Write to us for a free copy of our full warranty. You'll be 
impressed how we stand behind our product.''

[50 FR 20899, May 21, 1985]



Sec. 239.3  ``Satisfaction Guarantees'' and similar representations 

in advertising; disclosure in advertising that mentions ``satisfaction 
guarantees'' or 
          similar representations.

    (a) A seller or manufacturer should use the terms ``Satisfaction 
Guarantee,'' ``Money Back Guarantee,'' ``Free Trial Offer,'' or similar 
representations in advertising only if the seller or manufacturer, as 
the case may be, refunds the full purchase price of the advertised 
product at the purchaser's request.
    (b) An advertisement that mentions a ``Satisfaction Guarantee'' or a 
similar representation should disclose, with such clarity and prominence 
as will be noticed and understood by prospective purchasers, any 
material limitations or conditions that apply to the ``Satisfaction 
Guarantee'' or similar representation.

    Examples: These examples are for both print and broadcast 
advertising. These examples are illustrative, not exhaustive.
    Example A: (In an advertisement mentioning a satisfaction guarantee 
that is conditioned upon return of the unused portion within 30 days) 
``We guarantee your satisfaction. If not completely satisfied with Acme 
Spot Remover, return the unused portion within 30 days for a full 
refund.''
    Example B: (In an advertisement mentioning a money back guarantee 
that is conditioned upon return of the product in its original 
packaging) ``Money Back Guarantee! Just return the ABC watch in its 
original package and ABC will fully refund your money.''



Sec. 239.4  ``Lifetime'' and similar representations.

    If an advertisement uses ``lifetime,'' ``life,'' or similar 
representations to describe the duration of a warranty or guarantee, 
then the advertisement should disclose, with such clarity and prominence 
as will be noticed and understood by prospective purchasers, the life to 
which the representation refers.

    Examples: These examples are for both print and broadcast 
advertising. These examples are illustrative, not exhaustive.
    Example A: (In an advertisement mentioning a lifetime guarantee on 
an automobile muffler where the duration of the guarantee is measured by 
the life of the car in which it is installed) ``Our lifetime guarantee 
on the Whisper Muffler protects you for as long as your car runs--even 
if you sell it, trade it, or give it away!''
    Example B: (In an advertisement mentioning a lifetime guarantee on a 
battery where the duration of the warranty is for as long as the 
original purchaser owns the car in which it was installed) ``Our battery 
is backed by our lifetime guarantee. Good for as long as you own the 
car!''



Sec. 239.5  Performance of warranties or guarantees.

    A seller or manufacturer should advertise that a product is 
warranted or guaranteed only if the seller or manufacturer, as the case 
may be, promptly and fully performs its obligations under the warranty 
or guarantee.



PART 240_GUIDES FOR ADVERTISING ALLOWANCES AND OTHER MERCHANDISING 
PAYMENTS AND SERVICES--Table of Contents




Sec.
240.1 Purpose of the Guides.
240.2 Applicability of the law.
240.3 Definition of seller.
240.4 Definition of customer.
240.5 Definition of competing customers.
240.6 Interstate commerce.
240.7 Services or facilities.
240.8 Need for a plan.
240.9 Proportionally equal terms.
240.10 Availability to all competing customers.
240.11 Wholesaler or third party performance of seller's obligations.
240.12 Checking customer's use of payments.
240.13 Customer's and third party liability.
240.14 Meeting competition.
240.15 Cost justification.


[[Page 163]]


    Authority: Secs. 5, 6, 38 Stat. 719, as amended, 721; 15 U.S.C. 45, 
46; 49 Stat. 1526; 15 U.S.C. 13, as amended.

    Source: 55 FR 33663, Aug. 17, 1990, unless otherwise noted.



Sec. 240.1  Purpose of the Guides.

    The purpose of these Guides is to provide assistance to businesses 
seeking to comply with sections 2 (d) and (e) of the Robinson-Patman Act 
(the ``Act''). The guides are based on the language of the statute, the 
legislative history, administrative and court decisions, and the 
purposes of the Act. Although the Guides are consistent with the case 
law, the Commission has sought to provide guidance in some areas where 
no definitive guidance is provided by the case law. The Guides are what 
their name implies--guidelines for compliance with the law. They do not 
have the force of law.



Sec. 240.2  Applicability of the law.

    (a) The substantive provisions of section 2 (d) and (e) apply only 
under certain circumstances. Section 2(d) applies only to:
    (1) A seller of products
    (2) Engaged in interstate commerce
    (3) That either directly or through an intermediary
    (4) Pays a customer for promotional services or facilities provided 
by the customer
    (5) In connection with the resale (not the initial sale between the 
seller and the customer) of the seller's products
    (6) Where the customer is in competition with one or more of the 
seller's other customers also engaged in the resale of the seller's 
products of like grade and quality.
    (b) Section 2(e) applies only to:
    (1) A seller of products
    (2) Engaged in interstate commerce
    (3) That either directly or through an intermediary
    (4) Furnishes promotional services or facilities to a customer
    (5) In connection with the resale (not the initial sale between the 
seller and the customer) of the seller's products
    (6) Where the customer is in competition with one or more of the 
seller's other customers also engaged in the resale of the seller's 
products of like grade and quality.
    (c) Additionally, section 5 of the FTC Act may apply to buyers of 
products for resale or to third parties. See Sec. 240.13 of these 
Guides.



Sec. 240.3  Definition of seller.

    Seller includes any person (manufacturer, wholesaler, distributor, 
etc.) who sells products for resale, with or without further processing. 
For example, selling candy to a retailer is a sale for resale without 
processing. Selling corn syrup to a candy manufacturer is a sale for 
resale with processing.



Sec. 240.4  Definition of customer.

    A customer is any person who buys for resale directly from the 
seller, or the seller's agent or broker. In addition, a ``customer'' is 
any buyer of the seller's product for resale who purchases from or 
through a wholesaler or other intermediate reseller. The word 
``customer'' which is used in section 2(d) of the Act includes 
``purchaser'' which is used in section 2(e).

    Note: There may be some exceptions to this general definition of 
``customer.'' For example, the purchaser of distress merchandise would 
not be considered a ``customer'' simply on the basis of such purchase. 
Similarly, a retailer or purchasing solely from other retailers, or 
making sporadic purchases from the seller or one that does not regularly 
sell the seller's product, or that is a type of retail outlet not 
usually selling such products (e.g., a hardware store stocking a few 
isolated food items) will not be considered a ``customer'' of the seller 
unless the seller has been put on notice that such retailer is selling 
its product.
    Example 1: A manufacturer sells to some retailers directly and to 
others through wholesalers. Retailer A purchases the manufacturer's 
product from a wholesaler and resells some of it to Retailer B. Retailer 
A is a customer of the manufacturer. Retailer B is not a customer unless 
the fact that it purchases the manufacturer's product is known to the 
manufacturer.
    Example 2: A manufacturer sells directly to some independent 
retailers, to the headquarters of chains and of retailer-owned 
cooperatives, and to wholesalers. The manufacturer offers promotional 
services or allowances for promotional activity to be performed at the 
retail level. With respect to such services and allowances, the direct-
buying independent retailers, the headquarters of the chains and 
retailer-owned cooperatives, and the wholesaler's independent retailer 
customers are customers of the manufacturer. Individual retail outlets 
of the

[[Page 164]]

chains and the members of the retailer-owned cooperatives are not 
customers of the manufacturer.
    Example 3: A seller offers to pay wholesalers to advertise the 
seller's product in the wholesalers' order books or in the wholesalers' 
price lists directed to retailers purchasing from the wholesalers. The 
wholesalers and retailer-owned cooperative headquarters and headquarters 
of other bona-fide buying groups are customers. Retailers are not 
customers for purposes of this promotion.



Sec. 240.5  Definition of competing customers.

    Competing customers are all businesses that compete in the resale of 
the seller's products of like grade and quality at the same functional 
level of distribution regardless of whether they purchase directly from 
the seller or through some intermediary.

    Example 1: Manufacturer A, located in Wisconsin and distributing 
shoes nationally, sells shoes to three competing retailers that sell 
only in the Roanoke, Virginia area. Manufacturer A has no other 
customers selling in Roanoke or its vicinity. If Manufacturer A offers 
its promotion to one Roanoke customer, it should include all three, but 
it can limit the promotion to them. The trade area should be drawn to 
include retailers who compete.
    Example 2: A national seller has direct-buying retailing customers 
reselling exclusively within the Baltimore area, and other customers 
within the area purchasing through wholesalers. The seller may lawfully 
engage in a promotional campaign confined to the Baltimore area, 
provided that it affords all of its retailing customers within the area 
the opportunity to participate, including those that purchase through 
wholesalers.
    Example 3: B manufactures and sells a brand of laundry detergent for 
home use. In one metropolitan area, B's detergent is sold by a grocery 
store and a discount department store. If these stores compete with each 
other, any allowance, service or facility that B makes available to the 
grocery store should also be made available on proportionally equal 
terms to the discount department store.



Sec. 240.6  Interstate commerce.

    The term interstate commerce has not been precisely defined in the 
statute. In general, if there is any part of a business which is not 
wholly within one state (for example, sales or deliveries of products, 
their subsequent distribution or purchase, or delivery of supplies or 
raw materials), the business may be subject to sections 2(d) and 2(e) of 
the Act. (The commerce standard for sections 2 (d) and (e) is at least 
as inclusive as the commerce standard for section 2(a).) Sales or 
promotional offers within the District of Columbia and most United 
States possessions are also covered by the Act.



Sec. 240.7  Services or facilities.

    The terms services and facilities have not been exactly defined by 
the statute or in decisions. One requirement, however, is that the 
services or facilities be used primarily to promote the resale of the 
seller's product by the customer. Services or facilities that relate 
primarily to the original sale are covered by section 2(a). The 
following list provides some examples--the list is not exhaustive--of 
promotional services and facilities covered by sections 2 (d) and (e):

Cooperative advertising;
Handbills;
Demonstrators and demonstrations;
Catalogues;
Cabinets;
Displays;
Prizes or merchandise for conducting promotional contests;
Special packaging, or package sizes.



Sec. 240.8  Need for a plan.

    A seller who makes payments or furnishes services that come under 
the Act should do so according to a plan. If there are many competing 
customers to be considered or if the plan is complex, the seller would 
be well advised to put the plan in writing. What the plan should include 
is describe in more detail in the remainder of these Guides. Briefly, 
the plan should make payments or services functionally available to all 
competing customers on proportionally equal terms. (See Sec. 240.9 of 
this part.) Alternative terms and conditions should be made available to 
customers who cannot, in a practical sense, take advantage of some of 
the plan's offerings. The seller should inform competing customers of 
the plans available to them, in time for them to decide whether to 
participate. (See Sec. 240.10 of this part.)

[[Page 165]]



Sec. 240.9  Proportionally equal terms.

    (a) Promotional services and allowances should be made available to 
all competing customers on proportionally equal terms. No single way to 
do this is prescribed by law. Any method that treats competing customers 
on proportionally equal terms may be used. Generally, this can be done 
most easily by basing the payments made or the services furnished on the 
dollar volume or on the quantity of the product purchased during a 
specified period. However, other methods that result in proportionally 
equal allowances and services being offered to all competing customers 
are acceptable.
    (b) When a seller offers more than one type of service, or payments 
for more than one type of service, all the services or payments should 
be offered on proportionally equal terms. The seller may do this by 
offering all the payments or services at the same rate per unit or 
amount purchased. Thus, a seller might offer promotional allowances of 
up to 12 cents a case purchased for expenditures on either newspaper 
advertising or handbills.

    Example 1: A seller may offer to pay a specified part (e.g., 50 
percent) of the cost of local advertising up to an amount equal to a 
specified percentage (e.g., 5 percent) of the dollar volume of purchases 
during a specified period of time.
    Example 2: A seller may place in reserve for each customer a 
specified amount of money for each unit purchased, and use it to 
reimburse these customers for the cost of advertising the seller's 
product.
    Example 3: A seller should not provide an allowance or service on a 
basis that has rates graduated with the amount of goods purchased, as, 
for instance, 1 percent of the first $1,000 purchased per month, 2 
percent of the second $1,000 per month, and 3 percent of all over that.
    Example 4: A seller should not identify or feature one or a few 
customers in its own advertising without making the same service 
available on proportionally equal terms to customers competing with the 
identified customer or customers.
    Example 5: A seller who makes employees available or arranges with a 
third party to furnish personnel for purposes of performing work for a 
customer should make the same offer available on proportionally equal 
terms to all other competing customers or offer useable and suitable 
services or allowances on proportionally equal terms to competing 
customers for whom such services are not useable and suitable. \1\
---------------------------------------------------------------------------

    \1\ The discriminatory purchase of display or shelf space, whether 
directly or by means of so-called allowances, may violate the Act, and 
may be considered an unfair method of competition in violation of 
section 5 of the Federal Trade Commission Act.
---------------------------------------------------------------------------

    Example 6: A seller should not offer to pay a straight line rate for 
advertising if such payment results in a discrimination between 
competing customers; e.g., the offer of $1.00 per line for advertising 
in a newspaper that charges competing customers different amounts for 
the same advertising space. The straight line rate is an acceptable 
method for allocating advertising funds if the seller offers small 
retailers that pay more than the lowest newspaper rate an alternative 
that enables them to obtain the same percentage of their advertising 
cost as large retailers. If the $1.00 per line allowance is based on 50 
percent of the newspaper's lowest contract rate of $2.00 per line, the 
seller should offer to pay 50 percent of the newspaper advertising cost 
of smaller retailers that establish, by invoice or otherwise, that they 
paid more than that contract rate.
    Example 7: A seller offers each customer promotional allowances at 
the rate of one dollar for each unit of its product purchased during a 
defined promotional period. If Buyer A purchases 100 units, Buyer B 50 
units, and Buyer C 25 units, the seller maintains proportional equality 
by allowing $100 to Buyer A, $50 to Buyer B, and $25 to Buyer C, to be 
used for the Buyers' expenditures on promotion.



Sec. 240.10  Availability to all competing customers.

    (a) Functional availability:
    (1) The seller should take reasonable steps to ensure that services 
and facilities are useable in a practical sense by all competing 
customers. This may require offering alternative terms and conditions 
under which customers can participate. When a seller provides 
alternatives in order to meet the availability requirement, it should 
take reasonable steps to ensure that the alternatives are proportionally 
equal, and the seller should inform competing customers of the various 
alternative plans.
    (2) The seller should insure that promotional plans or alternatives 
offered to retailers do not bar any competing retailers from 
participation, whether they purchase directly from the seller

[[Page 166]]

or through a wholesaler or other intermediary.
    (3) When a seller offers to competing customers alternative services 
or allowances that are proportionally equal and at least one such offer 
is useable in a practical sense by all competing customers, and refrains 
from taking steps to prevent customers from participating, it has 
satisfied its obligation to make services and allowances ``functionally 
available'' to all customers. Therefore, the failure of any customer to 
participate in the program does not place the seller in violation of the 
Act.

    Example 1: A manufacturer offers a plan for cooperative advertising 
on radio, TV, or in newspapers of general circulation. Because the 
purchases of some of the manufacturer's customers are too small this 
offer is not useable in a practical sense by them. The manufacturer 
should offer them alternative(s) on proportionally equal terms that are 
useable in a practical sense by them.
    Example 2: A seller furnishes demonstrators to large department 
store customers. The seller should provide alternatives useable in a 
practical sense on proportionally equal terms to those competing 
customers who cannot use demonstrators. The alternatives may be services 
useable in a practical sense that are furnished by the seller, or 
payments by the seller to customers for their advertising or promotion 
of the seller's product.
    Example 3: A seller offers to pay 75 percent of the cost of 
advertising in daily newspapers, which are the regular advertising media 
of the seller's large or chain store customers, but a lesser amount, 
such as only 50 percent of the cost, or even nothing at all, for 
advertising in semi-weekly, weekly, or other newspapers or media that 
may be used by small retail customers. Such a plan discriminates against 
particular customers or classes of customers. To avoid that 
discrimination, the seller in offering to pay allowances for newspaper 
advertising should offer to pay the same percent of the cost of 
newspaper advertising for all competing customers in a newspaper of the 
customer's choice, or at least in those newspapers that meet the 
requirements for second class mail privileges. While a small customer 
may be offered, as an alternative to advertising in daily newspapers, 
allowances for other media and services such as envelope stuffers, 
handbills, window banners, and the like, the small customer should have 
the choice to use its promotional allowance for advertising similar to 
that available to the larger customers, if it can practicably do so.
    Example 4: A seller offers short term displays of varying sizes, 
including some which are useable by each of its competing customers in a 
practical business sense. The seller requires uniform, reasonable 
certification of performance by each customer. Because they are 
reluctant to process the required paper work, some customers do not 
participate. This fact does not place the seller in violation of the 
functional availability requirement and it is under no obligation to 
provide additional alternatives.

    (b) Notice of available services and allowances: The seller has an 
obligation to take steps reasonably designed to provide notice to 
competing customers of the availability of promotional services and 
allowances. Such notification should include enough details of the offer 
in time to enable customers to make an informed judgment whether to 
participate. When some competing customers do not purchase directly from 
the seller, the seller must take steps reasonably designed to provide 
notice to such indirect customers. Acceptable notification may vary. The 
following is a non-exhaustive list of acceptable methods of 
notification:
    (1) By providing direct notice to customers;
    (2) When a promotion consists of providing retailers with display 
materials, by including the materials within the product shipping 
container;
    (3) By including brochures describing the details of the offer in 
shipping containers;
    (4) By providing information on shipping containers or product 
packages of the availability and essential features of an offer, 
identifying a specific source for further information;
    (5) By placing at reasonable intervals in trade publications of 
general and widespread distribution announcements of the availability 
and essential features of promotional offers, identifying a specific 
source for further information; and
    (6) If the competing customers belong to an identifiable group on a 
specific mailing list, by providing relevant information of promotional 
offers to customers on that list. For example, if a product is sold 
lawfully only under Government license (alcoholic beverages, etc.), the 
seller may inform only its customers holding licenses.
    (c) A seller may contract with intermediaries or other third parties 
to provide notice. See Sec. 240.11.


[[Page 167]]


    Example 1: A seller has a plan for the retail promotion of its 
product in Philadelphia. Some of its retailing customers purchase 
directly and it offers the plan to them. Other Philadelphia retailers 
purchase the seller's product through wholesalers. The seller may use 
the wholesalers to reach the retailing customers that buy through them, 
either by having the wholesalers notify these retailers, or by using the 
wholesalers' customer lists for direct notification by the seller.
    Example 2: A seller that sells on a direct basis to some retailers 
in an area, and to other retailers in the area through wholsesalers, has 
a plan for the promotion of its product at the retail level. If the 
seller directly notifies competing direct purchasing retailers, and 
competing retailers purchasing through the wholesalers, the seller is 
not required to notify its wholesalers.
    Example 3: A seller regularly promotes its product at the retail 
level and during the year has various special promotional offers. The 
seller's competing customers include large direct-purchasing retailers 
and smaller retailers that purchase through wholesalers. The promotions 
offered can best be used by the smaller retailers if the funds to which 
they are entitled are pooled and used by the wholesalers on their behalf 
(newspaper advertisements, for example). If retailers purchasing through 
a wholesaler designate that wholesaler as their agent for receiving 
notice of, collecting, and using promotional allowances for them, the 
seller may assume that notice of, and payment under, a promotional plan 
to such wholesaler constitutes notice and payment to the retailer. The 
seller must have a reasonable basis for concluding that the retailers 
have designated the wholesaler as their agent.



Sec. 240.11  Wholesaler or third party performance of seller's 
obligations.

    A seller may contract with intermediaries, such as wholesalers, 
distributors, or other third parties, to perform all or part of the 
seller's obligations under sections 2 (d) and (e). The use of 
intermediaries does not relieve a seller of its responsibility to comply 
with the law. Therefore, in contracting with an intermediary, a seller 
should ensure that its obligations under the law are in fact fulfilled.



Sec. 240.12  Checking customer's use of payments.

    The seller should take reasonable precautions to see that the 
services the seller is paying for are furnished and that the seller is 
not overpaying for them. The customer should expend the allowance solely 
for the purpose for which it was given. If the seller knows or should 
know that what the seller is paying for or furnishing is not being 
properly used by some customers, the improper payments or services 
should be discontinued.



Sec. 240.13  Customer's and third party liability.

    (a) Customer's liability: Sections 2 (d) and (e) apply to sellers 
and not to customers. However, the Commission may proceed under section 
5 of the Federal Trade Commission Act against a customer who knows, or 
should know, that it is receiving a discriminatory price through 
services or allowances not made available on proportionally equal terms 
to its competitors engaged in the resale of a seller's product. 
Liability for knowingly receiving such a discrimination may result 
whether the discrimination takes place directly through payments or 
services, or indirectly through deductions from purchase invoices or 
other similar means.

    Example 1: A customer should not induce or receive advertising 
allowances for special promotion of the seller's product in connection 
with the customer's anniversary sale or new store opening when the 
customer knows or should know that such allowances, or suitable 
alternatives, are not available on proportionally equal terms to all 
other customers competing with it in the distribution of the seller's 
product.
    Example 2: Frequently the employees of sellers or third parties, 
such as brokers, perform in-store services for their grocery retailer 
customers, such as stocking of shelves, building of displays and 
checking or rotating inventory, etc. A customer operating a retail 
grocery business should not induce or receive such services when the 
customer knows or should know that such services (or usable and suitable 
alternative services) are not available on proportionally equal terms to 
all other customers competing with it in the distribution of the 
seller's product.
    Example 3: Where a customer has entered into a contract, 
understanding, or arrangement for the purchase of advertising with a 
newspaper or other advertising medium that provides for a deferred 
rebate or other reduction in the price of the advertising, the customer 
should advise any seller from whom reimbursement for the advertising is 
claimed that the claimed rate of reimbursement is subject to a deferred 
rebate or other reduction in price. In the event that any rebate or

[[Page 168]]

adjustment in the price is received, the customer should refund to the 
seller the amount of any excess payment or allowance.
    Example 4: A customer should not induce or receive an allowance in 
excess of that offered in the seller's advertising plan by billing the 
seller at ``vendor rates'' or for any other amount in excess of that 
authorized in the seller's promotional program.

    (b) Third party liability: Third parties, such as advertising media, 
may violate section 5 of the Federal Trade Commission Act through double 
or fictitious rates or billing. An advertising medium, such as a 
newspaper, broadcast station, or printer of catalogues, that publishes a 
rate schedule containing fictitious rates (or rates that are not 
reasonably expected to be applicable to a representative number of 
advertisers), may violate section 5 if the customer uses such deceptive 
schedule or invoice for a claim for an advertising allowance, payment or 
credit greater than that to which it would be entitled under the 
seller's promotional offering. Similarly, an advertising medium that 
furnishes a customer with an invoice that does not reflect the 
customer's actual net advertising cost may violate section 5 if the 
customer uses the invoice to obtain larger payments than it is entitled 
to receive.

    Example 1: A newspaper has a ``national'' rate and a lower ``local'' 
rate. A retailer places an advertisement with the newspaper at the local 
rate for a seller's product for which the retailer will seek 
reimbursement under the seller's cooperative advertising plan. The 
newspaper should not send the retailer two bills, one at the national 
rate and another at the local rate actually charged.
    Example 2: A newspaper has several published rates. A large retailer 
has in the past earned the lowest rate available. The newspaper should 
not submit invoices to the retailer showing a high rate by agreement 
between them unless the invoice discloses that the retailer may receive 
a rebate and states the amount (or approximate amount) of the rebate, if 
known, and if not known, the amount of rebate the retailer could 
reasonably anticipate.
    Example 3: A radio station has a flat rate for spot announcements, 
subject to volume discounts. A retailer buys enough spots to qualify for 
the discounts. The station should not submit an invoice to the retailer 
that does not show either the actual net cost or the discount rate.
    Example 4: An advertising agent buys a large volume of newspaper 
advertising space at a low, unpublished negotiated rate. Retailers then 
buy the space from the agent at a rate lower than they could buy this 
space directly from the newspaper. The agent should not furnish the 
retailers invoices showing a rate higher than the retailers actually 
paid for the space.



Sec. 240.14  Meeting competition.

    A seller charged with discrimination in violation of sections 2 (d) 
and (e) may defend its actions by showing that particular payments were 
made or services furnished in good faith to meet equally high payments 
or equivalent services offered or supplied by a competing seller. This 
defense is available with respect to payments or services offered on an 
area-wide basis, to those offered to new as well as old customers, and 
regardless of whether the discrimination has been caused by a decrease 
or an increase in the payments or services offered. A seller must 
reasonably believe that its offers are necessary to meet a competitor's 
offer.



Sec. 240.15  Cost justification.

    It is no defense to a charge of unlawful discrimination in the 
payment of an allowance or the furnishing of a service for a seller to 
show that such payment or service could be justified through savings in 
the cost of manufacture, sale or delivery.



PART 251_GUIDE CONCERNING USE OF THE WORD ``FREE'' AND SIMILAR 
REPRESENTATIONS--Table of Contents






Sec. 251.1  The guide.

    (a) General. (1) The offer of ``Free'' merchandise or service is a 
promotional device frequently used to attract customers. Providing such 
merchandise or service with the purchase of some other article or 
service has often been found to be a useful and valuable marketing tool.
    (2) Because the purchasing public continually searches for the best 
buy, and regards the offer of ``Free'' merchandise or service to be a 
special bargain, all such offers must be made with extreme care so as to 
avoid any possibility that consumers will be misled or

[[Page 169]]

deceived. Representative of the language frequently used in such offers 
are ``Free'', ``Buy 1-Get 1 Free'', ``2-for-1 Sale'', ``50% off with 
purchase of Two'', ``1[cent] Sale'', etc. (Related representations that 
raise many of the same questions include ``---- Cents-Off'', ``Half-
Price Sale'', ``\1/2\ Off'', etc. See the Commission's ``Fair Packaging 
and Labeling Regulation Regarding `Cents-Off' and Guides Against 
Deceptive Pricing.'')
    (b) Meaning of ``Free''. (1) The public understands that, except in 
the case of introductory offers in connection with the sale of a product 
or service (See paragraph (f) of this section), an offer of ``Free'' 
merchandise or service is based upon a regular price for the merchandise 
or service which must be purchased by consumers in order to avail 
themselves of that which is represented to be ``Free''. In other words, 
when the purchaser is told that an article is ``Free'' to him if another 
article is purchased, the word ``Free'' indicates that he is paying 
nothing for that article and no more than the regular price for the 
other. Thus, a purchaser has a right to believe that the merchant will 
not directly and immediately recover, in whole or in part, the cost of 
the free merchandise or service by marking up the price of the article 
which must be purchased, by the substitution of inferior merchandise or 
service, or otherwise.
    (2) The term regular when used with the term price, means the price, 
in the same quantity, quality and with the same service, at which the 
seller or advertiser of the product or service has openly and actively 
sold the product or service in the geographic market or trade area in 
which he is making a ``Free'' or similar offer in the most recent and 
regular course of business, for a reasonably substantial period of time, 
i.e., a 30-day period. For consumer products or services which fluctuate 
in price, the ``regular'' price shall be the lowest price at which any 
substantial sales were made during the aforesaid 30-day period. Except 
in the case of introductory offers, if no substantial sales were made, 
in fact, at the ``regular'' price, a ``Free'' or similar offer would not 
be proper.
    (c) Disclosure of conditions. When making ``Free'' or similar offers 
all the terms, conditions and obligations upon which receipt and 
retention of the ``Free'' item are contingent should be set forth 
clearly and conspicuously at the outset of the offer so as to leave no 
reasonable probability that the terms of the offer might be 
misunderstood. Stated differently, all of the terms, conditions and 
obligations should appear in close conjunction with the offer of 
``Free'' merchandise or service. For example, disclosure of the terms of 
the offer set forth in a footnote of an advertisement to which reference 
is made by an asterisk or other symbol placed next to the offer, is not 
regarded as making disclosure at the outset. However, mere notice of the 
existence of a ``Free'' offer on the main display panel of a label or 
package is not precluded provided that (1) the notice does not 
constitute an offer or identify the item being offered ``Free'', (2) the 
notice informs the customer of the location, elsewhere on the package or 
label, where the disclosures required by this section may be found, (3) 
no purchase or other such material affirmative act is required in order 
to discover the terms and conditions of the offer, and (4) the notice 
and the offer are not otherwise deceptive.
    (d) Supplier's responsibilities. Nothing in this section should be 
construed as authorizing or condoning the illegal setting or policing of 
retail prices by a supplier. However, if the supplier knows, or should 
know, that a ``Free'' offer he is promoting is not being passed on by a 
reseller, or otherwise is being used by a reseller as an instrumentality 
for deception, it is improper for the supplier to continue to offer the 
product as promoted to such reseller. He should take appropriate steps 
to bring an end to the deception, inlcuding the withdrawal of the 
``Free'' offer.
    (e) Resellers' participation in supplier's offers. Prior to 
advertising a ``Free'' promotion, a supplier should offer the product as 
promoted to all competing resellers as provided for in the Commission's 
``Guides for Advertising Allowances and Other Merchandising

[[Page 170]]

Payments and Services.'' In advertising the ``Free'' promotion, the 
supplier should identify those areas in which the offer is not available 
if the advertising is likely to be seen in such areas, and should 
clearly state that it is available only through participating resellers, 
indicating the extent of participation by the use of such terms as 
``some'', ``all'', ``a majority'', or ``a few'', as the case may be.
    (f) Introductory offers. (1) No ``Free'' offer should be made in 
connection with the introduction of a new product or service offered for 
sale at a specified price unless the offeror expects, in good faith, to 
discontinue the offer after a limited time and to commence selling the 
product or service promoted, separately, at the same price at which it 
was promoted with the ``Free'' offer.
    (2) In such offers, no representation may be made that the price is 
for one item and that the other is ``Free'' unless the offeror expects, 
in good faith, to discontinue the offer after a limited time and to 
commence selling the product or service promoted, separately, at the 
same price at which it was promoted with a ``Free'' offer.
    (g) Negotiated sales. If a product or service usually is sold at a 
price arrived at through bargaining, rather than at a regular price, it 
is improper to represent that another product or service is being 
offered ``Free'' with the sale. The same representation is also improper 
where there may be a regular price, but where other material factors 
such as quantity, quality, or size are arrived at through bargaining.
    (h) Frequency of offers. So that a ``Free'' offer will be special 
and meaningful, a single size of a product or a single kind of service 
should not be advertised with a ``Free'' offer in a trade area for more 
than 6 months in any 12-month period. At least 30 days should elapse 
before another such offer is promoted in the same trade area. No more 
than three such offers should be made in the same area in any 12-month 
period. In such period, the offeror's sale in that area of the product 
in the size promoted with a ``Free'' offer should not exceed 50 percent 
of the total volume of his sales of the product, in the same size, in 
the area.
    (i) Similar terms. Offers of ``Free'' merchandise or services which 
may be deceptive for failure to meet the provisions of this section may 
not be corrected by the substitution of such similar words and terms as 
``gift'', ``given without charge'', ``bonus'', or other words or terms 
which tend to convey the impression to the consuming public that an 
article of merchandise or service is ``Free''.

(38 Stat. 717, as amended; 15 U.S.C. 41-58)

[36 FR 21517, Nov. 10, 1971]



PART 254_GUIDES FOR PRIVATE VOCATIONAL AND DISTANCE EDUCATION 
SCHOOLS--Table of Contents




Sec.
254.0 Scope and application.
254.1 Definitions.
254.2 Deceptive trade or business names.
254.3 Misrepresentation of extent or nature of accreditation or 
          approval.
254.4 Misrepresentation of facilities, services, qualifications of 
          staff, status, and employment prospects for students after 
          training.
254.5 Misrepresentations of enrollment qualifications or limitations.
254.6 Deceptive use of diplomas, degrees, or certificates.
254.7 Deceptive sales practices.

    Authority: 38 Stat. 717, as amended; 15 U.S.C. 41-58.



Sec. 254.0  Scope and application.

    (a) The Guides in this part apply to persons, firms, corporations, 
or organizations engaged in the operation of privately owned schools 
that offer resident or distance courses, training, or instruction 
purporting to prepare or qualify individuals for employment in any 
occupation or trade, or in work requiring mechanical, technical, 
artistic, business, or clerical skills, or that is for the purpose of 
enabling a person to improve his appearance, social aptitude, 
personality, or other attributes. These Guides do not apply to resident 
primary or secondary schools or institutions of higher education 
offering at least a 2-year program of accredited college level studies 
generally acceptable for credit toward a bachelor's degree.

[[Page 171]]

    (b) These Guides represent administrative interpretations of laws 
administered by the Federal Trade Commission for the guidance of the 
public in conducting its affairs in conformity with legal requirements. 
These Guides specifically address the application of section 5 of the 
FTC Act (15 U.S.C. 45) to the advertising, promotion, marketing, and 
sale of courses or programs of instruction offered by private vocational 
or distance education schools. The Guides provide the basis for 
voluntary compliance with the law by members of the industry. Practices 
inconsistent with these Guides may result in corrective action by the 
Commission under section 5 if, after investigation, the Commission has 
reason to believe that the practices fall within the scope of conduct 
declared unlawful by the statute.

[63 FR 42572, Aug. 10, 1998]



Sec. 254.1  Definitions.

    (a) Accredited. A school or course has been evaluated and found to 
meet established criteria by an accrediting agency or association 
recognized for such purposes by the U.S. Department of Education.
    (b) Approved. A school or course has been recognized by a State or 
Federal agency as meeting educational standards or other related 
qualifications as prescribed by that agency for the school or course to 
which the term is applied. The term is not and should not be used 
interchangeably with ``accredited.'' The term ``approved'' is not 
justified by the mere grant of a corporate charter to operate or license 
to do business as a school and should not be used unless the represented 
``approval'' has been affirmatively required or authorized by State or 
Federal law.
    (c) Industry member. Industry members are the persons, firms, 
corporations, or organizations covered by these Guides, as explained in 
Sec. 254.0(a).

[63 FR 42572, Aug. 10, 1998]



Sec. 254.2  Deceptive trade or business names.

    (a) It is deceptive for an industry member to use any trade or 
business name, label, insignia, or designation which misleads or 
deceives prospective students as to the nature of the school, its 
accreditation, programs of instruction, methods of teaching, or any 
other material fact.
    (b) It is deceptive for an industry member to misrepresent, directly 
or indirectly, by the use of a trade or business name or in any other 
manner that:
    (1) It is a part of or connected with a branch, bureau, or agency of 
the U.S. Government, or of any State, or civil service commission;
    (2) It is an employment agency or an employment agent or authorized 
training facility for any industry or business or otherwise deceptively 
conceal the fact that it is a school.
    (c) If an industry member conducts its instruction by 
correspondence, or other form of distance education, it is deceptive to 
fail to clearly and conspicuously disclose that fact in all promotional 
materials.

[63 FR 42573, Aug. 10, 1998]



Sec. 254.3  Misrepresentation of extent or nature of accreditation or 
approval.

    (a) It is deceptive for an industry member to misrepresent, directly 
or indirectly, the extent or nature of any approval by a State agency or 
accreditation by an accrediting agency or association. For example, an 
industry member should not:
    (1) Represent, without qualification, that its school is accredited 
unless all programs of instruction have been accredited by an 
accrediting agency recognized by the U.S. Department of Education. If an 
accredited school offers courses or programs of instruction that are not 
accredited, all advertisements or promotional materials pertaining to 
those courses or programs, and making reference to the accreditation of 
the school, should clearly and conspicuously disclose that those 
particular courses or programs are not accredited.
    (2) Represent that its school or a course is approved, unless the 
nature, extent, and purpose of that approval are disclosed.
    (3) Misrepresent that students successfully completing a course or 
program of instruction can transfer the credit to an accredited 
institution of higher education.

[[Page 172]]

    (b) It is deceptive for an industry member to misrepresent that a 
course of instruction has been approved by a particular industry, or 
that successful completion of the course qualifies the student for 
admission to a labor union or similar organization or for receiving a 
State or Federal license to perform certain functions.
    (c) It is deceptive for an industry member to misrepresent that its 
courses are recommended by vocational counselors, high schools, 
colleges, educational organizations, employment agencies, or members of 
a particular industry, or that it has been the subject of unsolicited 
testimonials or endorsements from former students. It is deceptive for 
an industry member to use testimonials or endorsements that do not 
accurately reflect current practices of the school or current conditions 
or employment opportunities in the industry or occupation for which 
students are being trained.

    Note to paragraph (c):
    The Commission's Guides Concerning Use of Endorsements and 
Testimonials in Advertising (part 255 of this chapter) provide further 
guidance in this area.

[63 FR 42573, Aug. 10, 1998]



Sec. 254.4  Misrepresentation of facilities, services, qualifications 
of staff, status, and employment prospects for students after training.

    (a) It is deceptive for an industry member to misrepresent, directly 
or indirectly, in advertising, promotional materials, or in any other 
manner, the size, location, services, facilities, or equipment of its 
school or the number or educational qualifications of its faculty and 
other personnel. For example, an industry member should not:
    (1) Misrepresent the qualifications, credentials, experience, or 
educational background of its instructors, sales representatives, or 
other employees.
    (2) Misrepresent, through statements or pictures, the nature or 
efficacy of its courses, training devices, methods, or equipment.
    (3) Misrepresent the availability of employment while the student is 
undergoing instruction or the role of the school in providing or 
arranging for such employment.
    (4) Misrepresent the availability or nature of any financial 
assistance available to students. If the cost of training is financed in 
whole or in part by loans, students should be informed that loans must 
be repaid whether or not they are successful in completing the program 
and obtaining employment.
    (5) Misrepresent the nature of any relationship between the school 
or its personnel and any government agency or that students of the 
school will receive preferred consideration for employment with any 
government agency.
    (6) Misrepresent that certain individuals or classes of individuals 
are members of its faculty or advisory board; have prepared 
instructional materials; or are otherwise affiliated with the school.
    (7) Misrepresent the nature and extent of any personal instruction, 
guidance, assistance, or other service, including placement assistance, 
it will provide students either during or after completion of a course.
    (b) It is deceptive for an industry member to misrepresent that it 
is a nonprofit organization or to misrepresent affiliation or connection 
with any public institution or private religious or charitable 
organization.
    (c) It is deceptive for an industry member to misrepresent that a 
course has been recently revised or instructional equipment is up-to-
date, or misrepresent its ability to keep a program current and up-to-
date.
    (d) It is deceptive for an industry member, in promoting any course 
of training in its advertising, promotional materials, or in any other 
manner, to misrepresent, directly or by implication, whether through the 
use of text, images, endorsements, or by other means, the availability 
of employment after graduation from a course of training, the success 
that the member's graduates have realized in obtaining such employment, 
or the salary that the member's graduates will receive in such 
employment.

    Note to paragraph (d):
    The Commission's Guides Concerning Use of Endorsements and 
Testimonials in Advertising (part 255 of this

[[Page 173]]

chapter) provide further guidance in this area.

[63 FR 42573, Aug. 10, 1998 as amended at, 63 FR 72350, Dec. 31, 1998]



Sec. 254.5  Misrepresentations of enrollment qualifications or 
limitations.

    (a) It is deceptive for an industry member to misrepresent the 
nature or extent of any prerequisites or qualifications for enrollment 
in a course or program of instruction.
    (b) It is deceptive for an industry member to misrepresent that the 
lack of a high school education or prior training or experience is not 
an impediment to successful completion of a course or obtaining 
employment in the field for which the course provides training.

[63 FR 42574, Aug. 10, 1998]



Sec. 254.6  Deceptive use of diplomas, degrees, or certificates.

    (a) It is deceptive for an industry member to issue a degree, 
diploma, certificate of completion, or any similar document, that 
misrepresents, directly or indirectly, the subject matter, substance, or 
content of the course of study or any other material fact concerning the 
course for which it was awarded or the accomplishments of the student to 
whom it was awarded.
    (b) It is deceptive for an industry member to offer or confer an 
academic, professional, or occupational degree, if the award of such 
degree has not been authorized by the appropriate State educational 
agency or approved by a nationally recognized accrediting agency, unless 
it clearly and conspicuously discloses, in all advertising and 
promotional materials that contain a reference to such degree, that its 
award has not been authorized or approved by such an agency.
    (c) It is deceptive for an industry member to offer or confer a high 
school diploma unless the program of instruction to which it pertains is 
substantially equivalent to that offered by a resident secondary school, 
and unless the student is informed, by a clear and conspicuous 
disclosure in writing prior to enrollment, that the industry member 
cannot guarantee or otherwise control the recognition that will be 
accorded the diploma by institutions of higher education, other schools, 
or prospective employers, and that such recognition is a matter solely 
within the discretion of those entities.

[63 FR 42574, Aug. 10, 1998]



Sec. 254.7  Deceptive sales practices.

    (a) It is deceptive for an industry member to use advertisements or 
promotional materials that misrepresent, directly or by implication, 
that employment is being offered or that a talent hunt or contest is 
being conducted. For example, captions such as, ``Men/women wanted to 
train for * * *,'' ``Help Wanted,'' ``Employment,'' ``Business 
Opportunities,'' and words or terms of similar import, may falsely 
convey that employment is being offered and therefore should be avoided.
    (b) It is deceptive for an industry member to fail to disclose to a 
prospective student, prior to enrollment, the total cost of the program 
and the school's refund policy if the student does not complete the 
program.
    (c) It is deceptive for an industry member to fail to disclose to a 
prospective student, prior to enrollment, all requirements for 
successfully completing the course or program and the circumstances that 
would constitute grounds for terminating the student's enrollment prior 
to completion of the program.

[63 FR 42574, Aug. 10, 1998 as amended at, 63 FR 72350, Dec. 31, 1998]



PART 255_GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN 
ADVERTISING--Table of Contents




Sec.
255.0 Definitions.
255.1 General considerations.
255.2 Consumer endorsements.
255.3 Expert endorsements.
255.4 Endorsements by organizations.
255.5 Disclosure of material connections.

    Authority: 38 Stat. 717, as amended; 15 U.S.C. 41-58.



Sec. 255.0  Definitions.

    (a) The Commission intends to treat endorsements and testimonials 
identically in the context of its enforcement of the Federal Trade 
Commission Act and for purposes of this part. The term

[[Page 174]]

endorsements is therefore generally used hereinafter to cover both terms 
and situations.
    (b) For purposes of this part, an endorsement means any advertising 
message (including verbal statements, demonstrations, or depictions of 
the name, signature, likeness or other identifying personal 
characteristics of an individual or the name or seal of an organization) 
which message consumers are likely to believe reflects the opinions, 
beliefs, findings, or experience of a party other than the sponsoring 
advertiser. The party whose opinions, beliefs, findings, or experience 
the message appears to reflect will be called the endorser and may be an 
individual, group or institution.
    (c) For purposes of this part, the term product includes any 
product, service, company or industry.
    (d) For purposes of this part, an expert is an individual, group or 
institution possessing, as a result of experience, study or training, 
knowledge of a particular subject, which knowledge is superior to that 
generally acquired by ordinary individuals.

    Example 1: A film critic's review of a movie is excerpted in an 
advertisement. When so used, the review meets the definition of an 
endorsement since it is viewed by readers as a statement of the critic's 
own opinions and not those of the film producer, distributor or 
exhibitor. Therefore, any alteration in or quotation from the text of 
the review which does not fairly reflect its substance would be a 
violation of the standards set by this part.
    Example 2: A TV commercial depicts two women in a supermarket buying 
a laundry detergent. The women are not identified outside the context of 
the advertisement. One comments to the other how clean her brand makes 
her family's clothes, and the other then comments that she will try it 
because she has not been fully satisfied with her own brand. This 
obvious fictional dramatization of a real life situation would not be an 
endorsement.
    Example 3: In an advertisement for a pain remedy, an announcer who 
is not familiar to consumers except as a spokesman for the advertising 
drug company praises the drug's ability to deliver fast and lasting pain 
relief. He purports to speak, not on the basis of his own opinions, but 
rather in the place of and on behalf of the drug company. Such an 
advertisement would not be an endorsement.
    Example 4: A manufacturer of automobile tires hires a well known 
professional automobile racing driver to deliver its advertising message 
in television commercials. In these commercials, the driver speaks of 
the smooth ride, strength, and long life of the tires. Even though the 
message is not expressly declared to be the personal opinion of the 
driver, it may nevertheless constitute an endorsement of the tires. Many 
consumers will recognize this individual as being primarily a racing 
driver and not merely a spokesman or announcer for the advertiser. 
Accordingly, they may well believe the driver would not speak for an 
automotive product unless he/she actually believed in what he/she was 
saying and had personal knowledge sufficient to form that belief. Hence 
they would think that the advertising message reflects the driver's 
personal views as well as those of the sponsoring advertiser. This 
attribution of the underlying views to the driver brings the 
advertisement within the definition of an endorsement for purposes of 
this part.
    Example 5: A television advertisement for golf balls shows a 
prominent and well-recognized professional golfer hitting the golf 
balls. This would be an endorsement by the golfer even though he makes 
no verbal statement in the advertisement.

[40 FR 22128, May 21, 1975, as amended at 45 FR 3872, Jan. 18, 1980]



Sec. 255.1  General considerations.

    (a) Endorsements must always reflect the honest opinions, findings, 
beliefs, or experience of the endorser. Furthermore, they may not 
contain any representations which would be deceptive, or could not be 
substantiated if made directly by the advertiser. [See Example 2 to 
Guide 3 (Sec. 255.3) illustrating that a valid endorsement may 
constitute all or part of an advertiser's substantiation.]
    (b) The endorsement message need not be phrased in the exact words 
of the endorser, unless the advertisement affirmatively so represents. 
However, the endorsement may neither be presented out of context nor 
reworded so as to distort in any way the endorser's opinion or 
experience with the product. An advertiser may use an endorsement of an 
expert or celebrity only as long as it has good reason to believe that 
the endorser continues to subscribe to the views presented. An 
advertiser may satisfy this obligation by securing the

[[Page 175]]

endorser's views at reasonable intervals where reasonableness will be 
determined by such factors as new information on the performance or 
effectiveness of the product, a material alteration in the product, 
changes in the performance of competitors' products, and the 
advertiser's contract commitments.
    (c) In particular, where the advertisement represents that the 
endorser uses the endorsed product, then the endorser must have been a 
bona fide user of it at the time the endorsement was given, 
Additionally, the advertiser may continue to run the advertisement only 
so long as he has good reason to believe that the endorser remains a 
bona fide user of the product. [See Sec. 255.1(b) regarding the ``good 
reason to believe'' requirement.]

    Guide 1, Example 1: A building contractor states in an advertisement 
that he specifies the advertiser's exterior house paint because of its 
remarkable quick drying properties and its durability. This endorsement 
must comply with the pertinent requirements of Guide 3. Subsequently, 
the advertiser reformulates its paint to enable it to cover exterior 
surfaces with only one coat. Prior to continued use of the contractor's 
endorsement, the advertiser must contact the contractor in order to 
determine whether the contractor would continue to specify the paint and 
to subscribe to the views presented previously.
    Example 2: A television advertisment portrays a woman seated at a 
desk on which rest five unmarked electric typewriters. An announcer says 
``We asked Mrs. X, an executive secretary for over ten years, to try 
these five unmarked typewriters and tell us which one she liked best.''
    The advertisement portrays the secretary typing on each machine, and 
then picking the advertiser's brand. The announcer asks her why, and 
Mrs. X gives her reasons. Assuming that consumers would perceive this 
presentation as a ``blind'' test, this endorsement would probably not 
represent that Mrs. X actually uses the advertiser's machines in her 
work. In addition, the endorsement may also be required to meet the 
standards of Guide 3 on Expert Endorsements.


[Guide 1]

[45 FR 3872, Jan. 18, 1980]



Sec. 255.2  Consumer endorsements.

    (a) An advertisement employing an endorsement reflecting the 
experience of an individual or a group of consumers on a central or key 
attribute of the product or service will be interpreted as representing 
that the endorser's experience is representative of what consumers will 
generally achieve with the advertised product in actual, albeit 
variable, conditions of use. Therefore, unless the advertiser possesses 
and relies upon adequate substantiation for this representation, the 
advertisement should either clearly and conspicuously disclose what the 
generally expected performance would be in the depicted circumstances or 
clearly and conspicuously disclose the limited applicability of the 
endorser's experience to what consumers may generally expect to achieve. 
The Commission's position regarding the acceptance of disclaimers or 
disclosures is described in the preamble to these Guides published in 
the Federal Register on January 18, 1980.
    (b) Advertisements presenting endorsements by what are represented, 
directly or by implication, to be ``actual consumers'' should utilize 
actual consumers, in both the audio and video or clearly and 
conspicuously disclose that the persons in such advertisements are not 
actual consumers of the advertised product.
    (c) Claims concerning the efficacy of any drug or device as defined 
in the Federal Trade Commission Act, 15 U.S.C. 55, shall not be made in 
lay endorsements unless (1) the advertiser has adequate scientific 
substantiation for such claims and (2) the claims are not inconsistent 
with any determination that has been made by the Food and Drug 
Administration with respect to the drug or device that is the subject of 
the claim.

    Guide 2, Example 1: An advertisement presents the endorsement of an 
owner of one of the advertiser's television sets. The consumer states 
that she has needed to take the set to the shop for repairs only one 
time during her 2-year period of ownership and the costs of servicing 
the set to date have been under $10.00. Unless the advertiser possesses 
and relied upon adequate substantiation for the implied claim that such 
performance reflects that which a significant proportion of consumers 
would be likely to experience, the advertiser should include a 
disclosure that either states clearly and conspicuously what the 
generally expectable performance would be or clearly and conspicuously 
informs consumers that the performance experienced by

[[Page 176]]

the endorser is not what they should expect to experience. The mere 
disclosure that ``not all consumers will get this result'' is 
insufficient because it can imply that while all consumers cannot expect 
the advertised results, a substantial number can expect them. [See the 
cross reference in Guide 2(a) regarding the acceptability of disclaimers 
or disclosures.]
    Example 2: An advertiser presents the results of a poll of consumers 
who have used the advertiser's cake mixes as well as their own recipes. 
The results purport to show that the majority believed that their 
families could not tell the difference between the advertised mix and 
their own cakes baked from scratch. Many of the consumers are actually 
pictured in the advertisement along with relevant, quoted portions of 
their statements endorsing the product. This use of the results of a 
poll or survey of consumers probably represents a promise to consumers 
that this is the typical result that ordinary consumers can expect from 
the advertiser's cake mix.
    Example 3: An advertisement purports to portray a ``hidden camera'' 
situation in a crowded cafeteria at breakfast time. A spokesperson for 
the advertiser asks a series of actual patrons of the cafeteria for 
their spontaneous, honest opinions of the advertiser's recently 
introduced breakfast cereal. Even though the words ``hidden camera'' are 
not displayed on the screen, and even though none of the actual patrons 
is specifically identified during the advertisement, the net impression 
conveyed to consumers may well be that these are actual customers, and 
not actors. If actors have been employed, this fact should be disclosed.


[Guide 2]

[45 FR 3872, Jan. 18, 1980]



Sec. 255.3  Expert endorsements.

    (a) Whenever an advertisement represents, directly or by 
implication, that the endorser is an expert with respect to the 
endorsement message, then the endorser's qualifications must in fact 
give him the expertise that he is represented as possessing with respect 
to the endorsement.
    (b) While the expert may, in endorsing a product, take into account 
factors not within his expertise (e.g., matters of taste or price), his 
endorsement must be supported by an actual exercise of his expertise in 
evaluating product features or characteristics with respect to which he 
is expert and which are both relevant to an ordinary consumer's use of 
or experience with the product and also are available to the ordinary 
consumer. This evaluation must have included an examination or testing 
of the product at least as extensive as someone with the same degree of 
expertise would normally need to conduct in order to support the 
conclusions presented in the endorsement. Where, and to the extent that, 
the advertisement implies that the endorsement was based upon a 
comparison such comparison must have been included in his evaluation; 
and as a result of such comparison, he must have concluded that, with 
respect to those features on which he is expert and which are relevant 
and available to an ordinary consumer, the endorsed product is at least 
equal overall to the competitors' products. Moreover, where the net 
impression created by the endorsement is that the advertised product is 
superior to other products with respect to any such feature or features, 
then the expert must in fact have found such superiority.

    Example 1: An endorsement of a particular automobile by one 
described as an ``engineer'' implies that the endorser's professional 
training and experience are such that he is well acquainted with the 
design and performance of automobiles. If the endorser's field is, for 
example, chemical engineering, the endorsement would be deceptive.
    Example 2: A manufacturer of automobile parts advertises that its 
products are approved by the ``American Institute of Science.'' From its 
very name, consumers would infer that the ``American Institute of 
Science'' is a bona fide independent testing organization with expertise 
in judging automobile parts and that, as such, it would not approve any 
automobile part without first testing its efficacy by means of valid 
scientific methods. Even if the American Institute of Science is such a 
bona fide expert testing organization, as consumers would expect, the 
endorsement may nevertheless be deceptive unless the Institute has 
conducted valid scientific tests of the advertised products and the test 
results support the endorsement message.
    Example 3: A manufacturer of a non-prescription drug product 
represents that its product has been selected in preference to competing 
products by a large metropolitan hospital. The hospital has selected the 
product because the manufacturer, unlike its competitors, has packaged 
each dose of the product separately. This package form is not generally 
available to the public. Under the circumstances, the endorsement would 
be deceptive because the basis for the choice of the manufacturer's 
product, convenience of

[[Page 177]]

packaging, is neither relevant nor available to consumers.
    Example 4: The president of a commercial ``home cleaning service'' 
states in a television advertisement that the service uses a particular 
brand of cleanser in its business. Since the cleaning service's 
professional success depends largely upon the performance of the 
cleansers it uses, consumers would expect the service to be expert with 
respect to judging cleansing ability, and not be satisfied using an 
inferior cleanser in its business when it knows of a better one 
available to it. Accordingly, the cleaning service's endorsement must at 
least conform to those consumer expectations. The service must, of 
course, actually use the endorsed cleanser. Additionally, on the basis 
of its expertise, it must have determined that the cleansing ability of 
the endorsed cleanser is at least equal (or superior, if such is the net 
impression conveyed by the advertisement) to that of competing products 
with which the service has had experience and which remain reasonably 
available to it. Since in this example, the cleaning service's president 
makes no mention that the endorsed cleanser was ``chosen,'' 
``selected,'' or otherwise evaluated in side-by-side comparisons against 
its competitors, it is sufficient if the service has relied solely upon 
its accumulated experience in evaluating cleansers without having to 
have performed side-by-side or scientific comparisons.
    Example 5: An association of professional athletes states in an 
advertisement that it has ``selected'' a particular brand of beverages 
as its ``official breakfast drink''. As in Example 4, the association 
would be regarded as expert in the field of nutrition for purposes of 
this section, because consumers would expect it to rely upon the 
selection of nutritious foods as part of its business needs. 
Consequently, the association's endorsement must be based upon an expert 
evaluation of the nutritional value of the endorsed beverage. 
Furthermore, unlike Example 4, the use of the words ``selected'' and 
``official'' in this endorsement imply that it was given only after 
direct comparisions had been performed among competing brands. Hence, 
the advertisement would be deceptive unless the association has in fact 
performed such comparisons between the endorsed brand and its leading 
competitors in terms of nutritional criteria, and the results of such 
comparisons conform to the net impression created by the advertisement.


[Guide 3]

[40 FR 22128, May 21, 1975]



Sec. 255.4  Endorsements by organizations.

    Endorsements by organizations, especially expert ones, are viewed as 
representing the judgment of a group whose collective experience exceeds 
that of any individual member, and whose judgments are generally free of 
the sort of subjective factors which vary from individual to individual. 
Therefore an organization's endorsement must be reached by a process 
sufficient to ensure that the endorsement fairly reflects the collective 
judgment of the organization. Moreover, if an organization is 
represented as being expert, then, in conjunction with a proper exercise 
of its expertise in evaluating the product under Sec. 255.3 of this 
part (Expert endorsements), it must utilize an expert or experts 
recognized as such by the organization or standards previously adopted 
by the organization and suitable for judging the relevant merits of such 
products.

    Example: A mattress seller advertises that its product is endorsed 
by a chiropractic association. Since the association would be regarded 
as expert with respect to judging mattresses, its endorsement must be 
supported by an expert evaluation by an expert or experts recognized as 
such by the organization, or by compliance with standards previously 
adopted by the organization and aimed at measuring the performance of 
mattresses in general and not designed with the particular attributes of 
the advertised mattress in mind. (See also Sec. 255.3, Example 5.)


[Guide 4]

[40 FR 22128, May 21, 1975]



Sec. 255.5  Disclosure of material connections.

    When there exists a connection between the endorser and the seller 
of the advertised product which might materially affect the weight or 
credibility of the endorsement (i.e., the connection is not reasonably 
expected by the audience) such connection must be fully disclosed. An 
example of a connection that is ordinarily expected by viewers and need 
not be disclosed is the payment or promise of payment to an endorser who 
is an expert or well known personality, as long as the advertiser does 
not represent that the endorsement was given without compensation. 
However, when the endorser is neither represented in the advertisement 
as an expert nor is known to a significant portion of the viewing 
public, then the advertiser should clearly

[[Page 178]]

and conspicuously disclose either the payment or promise of compensation 
prior to and in exchange for the endorsement or the fact that the 
endorser knew or had reasons to know or to believe that if the 
endorsement favors the advertised product some benefit, such as an 
appearance on TV, would be extended to the endorser.

    Example 1: A drug company commissions research on its product by a 
well-known research organization. The drug company pays a substantial 
share of the expenses of the research project, but the test design is 
under the control of the research organization. A subsequent 
advertisement by the drug company mentions the research results as the 
``findings'' of the well-known research organization. The advertiser's 
payment of expenses to the research organization need not be disclosed 
in this advertisement. Application of the standards set by Guides 3 and 
4 provides sufficient assurance that the advertiser's payment will not 
affect the weight or credibility of the endorsement.
    Example 2: A film star endorses a particular food product. The 
endorsement regards only points of taste and individual preference. This 
endorsement must of course comply with Sec. 255.1; but even though the 
compensation paid the endorser is substantial, neither the fact nor the 
amount of compensation need be revealed.
    Example 3: An actual patron of a restaurant, who is neither known to 
the public nor presented as an expert, is shown seated at the counter. 
He is asked for his ``spontaneous'' opinion of a new food product served 
in the restaurant. Assume, first, that the advertiser had posted a sign 
on the door of the restaurant informing all who entered that day that 
patrons would be interviewed by the advertiser as part of its TV 
promotion of its new soy protein ``steak''. This notification would 
materially affect the weight or credibility of the patron's endorsement, 
and, therefore, viewers of the advertisement should be clearly and 
conspicuously informed of the circumstances under which the endorsement 
was obtained.
    Assume, in the alternative, that the advertiser had not posted a 
sign on the door of the restaurant, but had informed all interviewed 
customers of the ``hidden camera'' only after interviews were completed 
and the customers had no reason to know or believe that their response 
was being recorded for use in an advertisement. Even if patrons were 
also told that they would be paid for allowing the use of their opinions 
in advertising, these facts need not be disclosed.


[Guide 5]

[45 FR 3873, Jan. 18, 1980]



PART 259_GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW AUTOMOBILES
--Table of Contents




Sec.
259.1 Definitions.
259.2 Advertising disclosures.

    Authority: 15 U.S.C. 41-58.



Sec. 259.1  Definitions.

    For the purposes of this part, the following definitions shall 
apply:
    (a) New automobile. Any passenger automobile or light truck for 
which a fuel economy label is required under the Energy Policy and 
Conservation Act (42 U.S.C. 6201 et seq.) or rules promulgated 
thereunder, the equitable or legal title to which has never been 
transferred by a manufacturer, distributor, or dealer to an ultimate 
purchaser. The term manufacturer shall mean any person engaged in the 
manufacturing or assembling of new automobiles, including any person 
importing new automobiles for resale and any person who acts for and is 
under control of such manufacturer, assembler, or importer in connection 
with the distribution of new automobiles. The term dealer shall mean any 
person, resident or located in the United States or any territory 
thereof, engaged in the sale or distribution of new automobiles to the 
ultimate purchaser. The term ultimate purchaser means, for purposes of 
this part, the first person, other than a dealer purchasing in his or 
her capacity as a dealer, who in good faith purchases such new 
automobile for purposes other than resale, including a person who leases 
such vehicle for his or her personal use.
    (b) Estimated city mpg. The gasoline consumption or mileage of new 
automobiles as determined in accordance with the city test procedure 
employed and published by the U.S. Environmental Protection Agency as 
described in 40 CFR 600.209-85 and expressed in miles-per-gallon, to the 
nearest whole mile-per-gallon, as measured, reported, published, or 
accepted by the U.S. Environmental Protection Agency.
    (c) Estimated highway mpg. The gasoline consumption or mileage of 
new automobiles as determined in accordance with the highway test 
procedure employed and published by the U.S.

[[Page 179]]

Environmental Protection Agency as described in 40 CFR 600.209-85 and 
expressed in miles-per-gallon, to the nearest whole mile-per-gallon, as 
measured, reported, published, or accepted by the U.S. Environmental 
Protection Agency.
    (d) Vehicle configuration. The unique combination of automobile 
features, as defined in 40 CFR 600.002-85(24).
    (e) Estimated in-use fuel economy range. The estimated range of city 
and highway fuel economy of the particular new automobile on which the 
label is affixed, as determined in accordance with procedures employed 
by the U.S. Environmental Protection Agency as described in 40 CFR 
600.311 (for the appropriate model year), and expressed in miles-per-
gallon, to the nearest whole mile-per-gallon, as measured, reported or 
accepted by the U.S. Environment Protection Agency.
    (f) Range of estimated fuel economy values for the class of new 
automobiles. The estimated city and highway fuel economy values of the 
class of automobile (e.g., compact) as determined by the U.S. 
Environmental Protection Agency pursuant to 40 CFR 600.315 (for the 
appropriate model year) and expressed in miles-per-gallon, to the 
nearest whole mile-per-gallon.

[60 FR 56231, Nov. 8, 1995]



Sec. 259.2  Advertising disclosures.

    (a) No manufacturer or dealer shall make any express or implied 
representation in advertising concerning the fuel economy of any new 
automobile \1\ unless such representation is accompanied by the 
following clear and conspicuous disclosures:
---------------------------------------------------------------------------

    \1\ The Commission will regard as an express or implied fuel economy 
representation one which a reasonable consumer, upon considering the 
representation in the context of the entire advertisement, would 
understand as referring to the fuel economy performance of the vehicle 
or vehicles advertised.
---------------------------------------------------------------------------

    (1) If the advertisement makes:
    (i) Both a city and a highway fuel economy representation, both the 
``estimated city mpg'' and the ``estimated highway mpg'' of such new 
automobile,\2\ must be disclosed;
---------------------------------------------------------------------------

    \2\ For purposes of Sec. 259.2(a), the ``estimated city mpg'' and 
the ``estimated highway mpg'' must be those applicable to the specific 
nameplate being advertised. Fuel economy estimates assigned to ``unique 
nameplates'' (see 40 CFR 600.207-86(a)(2)) apply only to such unique car 
lines. For example, if a manufacturer has a model named the ``XZA'' that 
has fuel economy estimates assigned to it and a derivative model named 
the ``Econo-XZA'' that has separate, higher fuel economy estimates 
assigned to it, these higher numbers assigned to the ``Econo-XZA'' 
cannot be used in advertisements for the ``XZA.''
---------------------------------------------------------------------------

    (ii) A representation regarding only city or only highway fuel 
economy, only the corresponding EPA estimate must be disclosed; \3\
---------------------------------------------------------------------------

    \3\ For example, if the representation clearly refers only to 
highway fuel economy, only the ``estimated highway mpg'' need be 
disclosed.
---------------------------------------------------------------------------

    (iii) A general fuel economy claim without reference to either city 
or highway, or if the representation refers to any combined fuel economy 
number, the ``estimated city mpg'' must be disclosed; \4\ and
---------------------------------------------------------------------------

    \4\ Nothing in this section should be construed as prohibiting 
disclosure of both the city and highway estimates.
---------------------------------------------------------------------------

    (2) That the U.S. Environmental Protection Agency is the source of 
the ``estimated city mpg'' and ``estimated highway mpg'' and that the 
numbers are estimates.\5\
---------------------------------------------------------------------------

    \5\ The Commission will regard the following as the minimum 
disclosure necessary to comply with Sec. 259.2(a)(2), regardless of the 
media in which the advertisement appears: ``EPA estimate(s).''
    For television, if the estimated mpg appears in the video, the 
disclosure must appear in the video; if the estimated mpg is audio, the 
disclosure must be audio.
---------------------------------------------------------------------------

    (b) If an advertisement for a new automobile cites:
    (1) The ``estimated in-use fuel economy range,'' the advertisement 
must state with equal prominence both the upper and lower number of the 
range, an explanation of the meaning of the numbers (i.e., city mpg 
range or highway mpg range or both), and that the U.S. Environmental 
Protection Agency is the source of the figures.
    (2) The ``range of estimated fuel economy values for the class of 
new automobiles'' as a basis for comparing the fuel economy of two or 
more automobiles, such comparison must be

[[Page 180]]

made to the same type of range (i.e., city or highway).\6\
---------------------------------------------------------------------------

    \6\ For example, an advertisement could not state that ``according 
to EPA estimates new automobiles in this class get as little as X mpg 
(citing a figure from the city range) while EPA estimates that this 
automobile gets X + mpg (citing the EPA highway estimates or a number 
from the EPA estimated in-use fuel economy highway range for the 
automobile).
---------------------------------------------------------------------------

    (c) Fuel economy estimates derived from a non-EPA test may be 
disclosed provided that:
    (1) The advertisement also discloses the ``estimated city mpg'' and/
or the ``estimated highway mpg,'' as required by Sec. 259.2(a), and the 
disclosure required by Sec. 259.2(a), and gives the ``estimated city 
mpg'' and/or the ``estimated highway mpg'' figure(s) substantially more 
prominence than any other estimate; \7\ provided, however, for radio and 
television advertisements in which any other estimate is used only in 
the audio, equal prominence must be given the ``estimated city mpg'' 
and/or the ``estimated highway mpg'' figure(s); \8\
---------------------------------------------------------------------------

    \7\ The Commission will regard the following as constituting 
``substantially more prominence:''
    For television only: If the estimated city and/or highway mpg and 
any other mileage estimate(s) appear only in the visual portion, the 
estimated city and/or highway mpg must appear in numbers twice as large 
as those used for any other estimate, and must remain on the screen at 
least as long as any other estimate. If the estimated city and highway 
mpg appear in the audio portion, visual broadcast of any other estimate 
must be accompanied by the simultaneous, at least equally prominent, 
visual broadcast of the estimated city and/or highway mpg. Each visual 
estimated city and highway mpg must be broadcast against a solid color 
background that contrasts easily with the color used for the numbers 
when viewed on both color and black and white television.
    For print only: The estimated city and/or highway mpg must appear in 
clearly legible type at least twice as large as that used for any other 
estimate. Alternatively, if the estimated city and highway mpg appear in 
type of the same size as such other estimate, they must be clearly 
legible and conspicuously circled. The estimated city and highway mpg 
must appear against a solid color, contrasting background. They may not 
appear in a footnote unless all references to fuel economy appear in a 
footnote.
    \8\ The Commission will regard the following as constituting equal 
prominence. For radio and television when any other estimate is used in 
the audio: The estimated city and/or highway mpg must be stated, either 
before or after each disclosure of such other estimate at least as 
audibly as such other estimate.
---------------------------------------------------------------------------

    (2) The source of the non-EPA test is clearly and conspicuously 
identified;
    (3) The driving conditions and variables simulated by the test which 
differ from those used to measure the ``estimated city mpg'' and/or the 
``estimated highway mpg,'' and which result in a change in fuel economy, 
are clearly and conspicuously disclosed.\9\ Such conditions and 
variables may include, but are not limited to, road or dynamometer test, 
average speed, range of speed, hot or cold start, and temperature; and
---------------------------------------------------------------------------

    \9\ For dynamometer tests any difference between the EPA and non-EPA 
tests must be disclosed. For in-use tests, the Commission realizes that 
it is impossible to duplicate the EPA test conditions, and that in-use 
tests may be designed to simulate a particular driving situation. It 
must be clear from the context of the advertisement what driving 
situation is being simulated (e.g., cold weather driving, highway 
driving, heavy load conditions). Furthermore, any driving or vehicle 
condition must be disclosed if it is significantly different from that 
which an appreciable number of consumers (whose driving condition is 
being simulated) would expect to encounter.
---------------------------------------------------------------------------

    (4) The advertisement clearly and conspicuously discloses any 
distinctions in ``vehicle configuration'' and other equipment affecting 
mileage performance (e.g., design or equipment differences which 
distinguish subconfigurations as defined by EPA) between the automobiles 
tested in the non-EPA test and the EPA tests.

[60 FR 56231, Nov. 8, 1995]



PART 260_GUIDES FOR THE USE OF ENVIRONMENTAL MARKETING CLAIMS--Table 
of Contents




Sec.
260.1 Statement of purpose.
260.2 Scope of guides.
260.3 Structure of the guides.
260.4 Review procedure.
260.5 Interpretation and substantiation of environmental marketing 
          claims.
260.6 General principles.
260.7 Environmental marketing claims.
260.8 Environmental assessment.


[[Page 181]]


    Authority: 15 U.S.C. 41-58.

    Source: 61 FR 53316, Oct. 11, 1996, unless otherwise noted.



Sec. 260.1  Statement of purpose.

    The guides in this part represent administrative interpretations of 
laws administered by the Federal Trade Commission for the guidance of 
the public in conducting its affairs in conformity with legal 
requirements. These guides specifically address the application of 
Section 5 of the FTC Act to environmental advertising and marketing 
practices. They provide the basis for voluntary compliance with such 
laws by members of industry. Conduct inconsistent with the positions 
articulated in these guides may result in corrective action by the 
Commission under Section 5 if, after investigation, the Commission has 
reason to believe that the behavior falls within the scope of conduct 
declared unlawful by the statute.



Sec. 260.2  Scope of guides.

    (a) These guides apply to environmental claims included in labeling, 
advertising, promotional materials and all other forms of marketing, 
whether asserted directly or by implication, through words, symbols, 
emblems, logos, depictions, product brand names, or through any other 
means, including marketing through digital or electronic means, such as 
the Internet or electronic mail. The guides apply to any claim about the 
environmental attributes of a product, package or service in connection 
with the sale, offering for sale, or marketing of such product, package 
or service for personal, family or household use, or for commercial, 
institutional or industrial use.
    (b) Because the guides are not legislative rules under Section 18 of 
the FTC Act, they are not themselves enforceable regulations, nor do 
they have the force and effect of law. The guides themselves do not 
preempt regulation of other federal agencies or of state and local 
bodies governing the use of environmental marketing claims. Compliance 
with federal, state or local law and regulations concerning such claims, 
however, will not necessarily preclude Commission law enforcement action 
under Section 5.

[63 FR 24248, May 1, 1998]



Sec. 260.3  Structure of the guides.

    The guides are composed of general principles and specific guidance 
on the use of environmental claims. These general principles and 
specific guidance are followed by examples that generally address a 
single deception concern. A given claim may raise issues that are 
addressed under more than one example and in more than one section of 
the guides. In many of the examples, one or more options are presented 
for qualifying a claim. These options are intended to provide a ``safe 
harbor'' for marketers who want certainty about how to make 
environmental claims. They do not represent the only permissible 
approaches to qualifying a claim. The examples do not illustrate all 
possible acceptable claims or disclosures that would be permissible 
under Section 5. In addition, some of the illustrative disclosures may 
be appropriate for use on labels but not in print or broadcast 
advertisements and vice versa. In some instances, the guides indicate 
within the example in what context or contexts a particular type of 
disclosure should be considered.



Sec. 260.4  Review procedure.

    The Commission will review the guides as part of its general program 
of reviewing all industry guides on an ongoing basis. Parties may 
petition the Commission to alter or amend these guides in light of 
substantial new evidence regarding consumer interpretation of a claim or 
regarding substantiation of a claim. Following review of such a 
petition, the Commission will take such action as it deems appropriate.



Sec. 260.5  Interpretation and substantiation of environmental 
marketing claims.

    Section 5 of the FTC Act makes unlawful deceptive acts and practices 
in or affecting commerce. The Commission's criteria for determining 
whether an express or implied claim has been

[[Page 182]]

made are enunciated in the Commission's Policy Statement on Deception. 
\1\ In addition, any party making an express or implied claim that 
presents an objective assertion about the environmental attribute of a 
product, package or service must, at the time the claim is made, possess 
and rely upon a reasonable basis substantiating the claim. A reasonable 
basis consists of competent and reliable evidence. In the context of 
environmental marketing claims, such substantiation will often require 
competent and reliable scientific evidence, defined as tests, analyses, 
research, studies or other evidence based on the expertise of 
professionals in the relevant area, conducted and evaluated in an 
objective manner by persons qualified to do so, using procedures 
generally accepted in the profession to yield accurate and reliable 
results. Further guidance on the reasonable basis standard is set forth 
in the Commission's 1983 Policy Statement on the Advertising 
Substantiation Doctrine. 49 FR 30999 (1984); appended to Thompson 
Medical Co., 104 F.T.C. 648 (1984). The Commission has also taken action 
in a number of cases involving alleged deceptive or unsubstantiated 
environmental advertising claims. A current list of environmental 
marketing cases and/or copies of individual cases can be obtained by 
calling the FTC Consumer Response Center at (202) 326-2222.
---------------------------------------------------------------------------

    \1\ Cliffdale Associates, Inc., 103 F.T.C. 110, at 176, 176 n.7, 
n.8, Appendix, reprinting letter dated Oct. 14, 1983, from the 
Commission to The Honorable John D. Dingell, Chairman, Committee on 
Energy and Commerce, U.S. House of Representatives (1984) (``Deception 
Statement'').

[63 FR 24248, May 1, 1998]



Sec. 260.6  General principles.

    The following general principles apply to all environmental 
marketing claims, including, but not limited to, those described in 
Sec. 260.7. In addition, Sec. 260.7 contains specific guidance 
applicable to certain environmental marketing claims. Claims should 
comport with all relevant provisions of these guides, not simply the 
provision that seems most directly applicable.
    (a) Qualifications and disclosures. The Commission traditionally has 
held that in order to be effective, any qualifications or disclosures 
such as those described in these guides should be sufficiently clear, 
prominent and understandable to prevent deception. Clarity of language, 
relative type size and proximity to the claim being qualified, and an 
absence of contrary claims that could undercut effectiveness, will 
maximize the likelihood that the qualifications and disclosures are 
appropriately clear and prominent.
    (b) Distinction between benefits of product, package and service. An 
environmental marketing claim should be presented in a way that makes 
clear whether the environmental attribute or benefit being asserted 
refers to the product, the product's packaging, a service or to a 
portion or component of the product, package or service. In general, if 
the environmental attribute or benefit applies to all but minor, 
incidental components of a product or package, the claim need not be 
qualified to identify that fact. There may be exceptions to this general 
principle. For example, if an unqualified ``recyclable'' claim is made 
and the presence of the incidental component significantly limits the 
ability to recycle the product, then the claim would be deceptive.

    Example 1: A box of aluminum foil is labeled with the claim 
``recyclable,'' without further elaboration. Unless the type of product, 
surrounding language, or other context of the phrase establishes whether 
the claim refers to the foil or the box, the claim is deceptive if any 
part of either the box or the foil, other than minor, incidental 
components, cannot be recycled.
    Example 2: A soft drink bottle is labeled ``recycled.'' The bottle 
is made entirely from recycled materials, but the bottle cap is not. 
Because reasonable consumers are likely to consider the bottle cap to be 
a minor, incidental component of the package, the claim is not 
deceptive. Similarly, it would not be deceptive to label a shopping bag 
``recycled'' where the bag is made entirely of recycled material but the 
easily detachable handle, an incidental component, is not.

    (c) Overstatement of environmental attribute: An environmental 
marketing claim should not be presented in a manner that overstates the 
environmental attribute or benefit, expressly

[[Page 183]]

or by implication. Marketers should avoid implications of significant 
environmental benefits if the benefit is in fact negligible.

    Example 1: A package is labeled, ``50% more recycled content than 
before.'' The manufacturer increased the recycled content of its package 
from 2 percent recycled material to 3 percent recycled material. 
Although the claim is technically true, it is likely to convey the false 
impression that the advertiser has increased significantly the use of 
recycled material.
    Example 2: A trash bag is labeled ``recyclable'' without 
qualification. Because trash bags will ordinarily not be separated out 
from other trash at the landfill or incinerator for recycling, they are 
highly unlikely to be used again for any purpose. Even if the bag is 
technically capable of being recycled, the claim is deceptive since it 
asserts an environmental benefit where no significant or meaningful 
benefit exists.
    Example 3: A paper grocery sack is labeled ``reusable.'' The sack 
can be brought back to the store and reused for carrying groceries but 
will fall apart after two or three reuses, on average. Because 
reasonable consumers are unlikely to assume that a paper grocery sack is 
durable, the unqualified claim does not overstate the environmental 
benefit conveyed to consumers. The claim is not deceptive and does not 
need to be qualified to indicate the limited reuse of the sack.
    Example 4: A package of paper coffee filters is labeled ``These 
filters were made with a chlorine-free bleaching process.'' The filters 
are bleached with a process that releases into the environment a 
reduced, but still significant, amount of the same harmful byproducts 
associated with chlorine bleaching. The claim is likely to overstate the 
product's benefits because it is likely to be interpreted by consumers 
to mean that the product's manufacture does not cause any of the 
environmental risks posed by chlorine bleaching. A claim, however, that 
the filters were ``bleached with a process that substantially reduces, 
but does not eliminate, harmful substances associated with chlorine 
bleaching'' would not, if substantiated, overstate the product's 
benefits and is unlikely to be deceptive.

    (d) Comparative claims: Environmental marketing claims that include 
a comparative statement should be presented in a manner that makes the 
basis for the comparison sufficiently clear to avoid consumer deception. 
In addition, the advertiser should be able to substantiate the 
comparison.

    Example 1: An advertiser notes that its shampoo bottle contains 
``20% more recycled content.'' The claim in its context is ambiguous. 
Depending on contextual factors, it could be a comparison either to the 
advertiser's immediately preceding product or to a competitor's product. 
The advertiser should clarify the claim to make the basis for comparison 
clear, for example, by saying ``20% more recycled content than our 
previous package.'' Otherwise, the advertiser should be prepared to 
substantiate whatever comparison is conveyed to reasonable consumers.
    Example 2: An advertiser claims that ``our plastic diaper liner has 
the most recycled content.'' The advertised diaper does have more 
recycled content, calculated as a percentage of weight, than any other 
on the market, although it is still well under 100% recycled. Provided 
the recycled content and the comparative difference between the product 
and those of competitors are significant and provided the specific 
comparison can be substantiated, the claim is not deceptive.
    Example 3: An ad claims that the advertiser's packaging creates 
``less waste than the leading national brand.'' The advertiser's source 
reduction was implemented sometime ago and is supported by a calculation 
comparing the relative solid waste contributions of the two packages. 
The advertiser should be able to substantiate that the comparison 
remains accurate.

[61 FR 53316, Oct. 11, 1996, as amended at 63 FR 24248, May 1, 1998]



Sec. 260.7  Environmental marketing claims.

    Guidance about the use of environmental marketing claims is set 
forth in this section. Each guide is followed by several examples that 
illustrate, but do not provide an exhaustive list of, claims that do and 
do not comport with the guides. In each case, the general principles set 
forth in Sec. 260.6 should also be followed.\2\
---------------------------------------------------------------------------

    \2\ These guides do not currently address claims based on a 
``lifecycle'' theory of environmental benefit. The Commission lacks 
sufficient information on which to base guidance on such claims.
---------------------------------------------------------------------------

    (a) General environmental benefit claims. It is deceptive to 
misrepresent, directly or by implication, that a product, package or 
service offers a general environmental benefit. Unqualified general 
claims of environmental benefit are difficult to interpret, and 
depending on their context, may convey a wide range of meanings to 
consumers. In many cases, such claims may convey that the product, 
package or service

[[Page 184]]

has specific and far-reaching environmental benefits. As explained in 
the Commission's Advertising Substantiation Statement, every express and 
material implied claim that the general assertion conveys to reasonable 
consumers about an objective quality, feature or attribute of a product 
or service must be substantiated. Unless this substantiation duty can be 
met, broad environmental claims should either be avoided or qualified, 
as necessary, to prevent deception about the specific nature of the 
---------------------------------------------------------------------------
environmental benefit being asserted.

    Example 1: A brand name like ``Eco-Safe'' would be deceptive if, in 
the context of the product so named, it leads consumers to believe that 
the product has environmental benefits which cannot be substantiated by 
the manufacturer. The claim would not be deceptive if ``Eco-Safe'' were 
followed by clear and prominent qualifying language limiting the safety 
representation to a particular product attribute for which it could be 
substantiated, and provided that no other deceptive implications were 
created by the context.
    Example 2: A product wrapper is printed with the claim 
``Environmentally Friendly.'' Textual comments on the wrapper explain 
that the wrapper is ``Environmentally Friendly because it was not 
chlorine bleached, a process that has been shown to create harmful 
substances.'' The wrapper was, in fact, not bleached with chlorine. 
However, the production of the wrapper now creates and releases to the 
environment significant quantities of other harmful substances. Since 
consumers are likely to interpret the ``Environmentally Friendly'' 
claim, in combination with the textual explanation, to mean that no 
significant harmful substances are currently released to the 
environment, the ``Environmentally Friendly'' claim would be deceptive.
    Example 3: A pump spray product is labeled ``environmentally safe.'' 
Most of the product's active ingredients consist of volatile organic 
compounds (VOCs) that may cause smog by contributing to ground-level 
ozone formation. The claim is deceptive because, absent further 
qualification, it is likely to convey to consumers that use of the 
product will not result in air pollution or other harm to the 
environment.
    Example 4: A lawn care pesticide is advertised as ``essentially non-
toxic'' and ``practically non-toxic.'' Consumers would likely interpret 
these claims in the context of such a product as applying not only to 
human health effects but also to the product's environmental effects. 
Since the claims would likely convey to consumers that the product does 
not pose any risk to humans or the environment, if the pesticide in fact 
poses a significant risk to humans or environment, the claims would be 
deceptive.
    Example 5: A product label contains an environmental seal, either in 
the form of a globe icon, or a globe icon with only the text ``Earth 
Smart'' around it. Either label is likely to convey to consumers that 
the product is environmentally superior to other products. If the 
manufacturer cannot substantiate this broad claim, the claim would be 
deceptive. The claims would not be deceptive if they were accompanied by 
clear and prominent qualifying language limiting the environmental 
superiority representation to the particular product attribute or 
attributes for which they could be substantiated, provided that no other 
deceptive implications were created by the context.
    Example 6: A product is advertised as ``environmentally 
preferable.'' This claim is likely to convey to consumers that this 
product is environmentally superior to other products. If the 
manufacturer cannot substantiate this broad claim, the claim would be 
deceptive. The claim would not be deceptive if it were accompanied by 
clear and prominent qualifying language limiting the environmental 
superiority representation to the particular product attribute or 
attributes for which it could be substantiated, provided that no other 
deceptive implications were created by the context.

    (b) Degradable/biodegradable/photo de grad able: It is deceptive to 
misrepresent, directly or by implication, that a product or package is 
degradable, biodegradable or photo de grad able. An unqualified claim 
that a product or package is degradable, biodegradable or photo de grad 
able should be substantiated by competent and reliable scientific 
evidence that the entire product or package will completely break down 
and return to nature, i.e., decompose into elements found in nature 
within a reasonably short period of time after customary disposal. 
Claims of de grad a bility, biode grad a bility or photo de grad abil 
ity should be qualified to the extent necessary to avoid consumer 
deception about:
    (1) The product or package's ability to degrade in the environment 
where it is customarily disposed; and
    (2) The rate and extent of degradation.

    Example 1: A trash bag is marketed as ``degradable,'' with no 
qualification or other disclosure. The marketer relies on soil burial 
tests to show that the product will decompose in the presence of water 
and oxygen.

[[Page 185]]

The trash bags are customarily disposed of in incineration facilities or 
at sanitary landfills that are managed in a way that inhibits 
degradation by minimizing moisture and oxygen. Degradation will be 
irrelevant for those trash bags that are incinerated and, for those 
disposed of in landfills, the marketer does not possess adequate 
substantiation that the bags will degrade in a reasonably short period 
of time in a landfill. The claim is therefore deceptive.
    Example 2: A commercial agricultural plastic mulch film is 
advertised as ``Photodegradable'' and qualified with the phrase, ``Will 
break down into small pieces if left uncovered in sunlight.'' The claim 
is supported by competent and reliable scientific evidence that the 
product will break down in a reasonably short period of time after being 
exposed to sunlight and into sufficiently small pieces to become part of 
the soil. The qualified claim is not deceptive. Because the claim is 
qualified to indicate the limited extent of breakdown, the advertiser 
need not meet the elements for an unqualified photo de grad able claim, 
i.e., that the product will not only break down, but also will decompose 
into elements found in nature.
    Example 3: A soap or shampoo product is advertised as 
``biodegradable,'' with no qualification or other disclosure. The 
manufacturer has competent and reliable scientific evidence 
demonstrating that the product, which is customarily disposed of in 
sewage systems, will break down and decompose into elements found in 
nature in a short period of time. The claim is not deceptive.
    Example 4: A plastic six-pack ring carrier is marked with a small 
diamond. Many state laws require that plastic six-pack ring carriers 
degrade if littered, and several state laws also require that the 
carriers be marked with a small diamond symbol to indicate that they 
meet performance standards for de grad a bility. The use of the diamond, 
by itself, does not constitute a claim of de grad a bility. \3\
---------------------------------------------------------------------------

    \3\ The guides' treatment of unqualified degradable claims is 
intended to help prevent consumer deception and is not intended to 
establish performance standards for laws intended to ensure the de grad 
a bility of products when littered.

    (c) Compostable. (1) It is deceptive to misrepresent, directly or by 
implication, that a product or package is compostable. A claim that a 
product or package is compostable should be substantiated by competent 
and reliable scientific evidence that all the materials in the product 
or package will break down into, or otherwise become part of, usable 
compost (e.g., soil-conditioning material, mulch) in a safe and timely 
manner in an appropriate composting program or facility, or in a home 
compost pile or device. Claims of compostability should be qualified to 
the extent necessary to avoid consumer deception. An unqualified claim 
may be deceptive if:
    (i) The package cannot be safely composted in a home compost pile or 
device; or
    (ii) The claim misleads consumers about the environmental benefit 
provided when the product is disposed of in a landfill.
    (2) A claim that a product is compostable in a municipal or 
institutional composting facility may need to be qualified to the extent 
necessary to avoid deception about the limited availability of such 
composting facilities.

    Example 1: A manufacturer indicates that its unbleached coffee 
filter is compostable. The unqualified claim is not deceptive provided 
the manufacturer can substantiate that the filter can be converted 
safely to usable compost in a timely manner in a home compost pile or 
device. If this is the case, it is not relevant that no local municipal 
or institutional composting facilities exist.
    Example 2: A lawn and leaf bag is labeled as ``Compostable in 
California Municipal Yard Trimmings Composting Facilities.'' The bag 
contains toxic ingredients that are released into the compost material 
as the bag breaks down. The claim is deceptive if the presence of these 
toxic ingredients prevents the compost from being usable.
    Example 3: A manufacturer makes an unqualified claim that its 
package is compostable. Although municipal or institutional composting 
facilities exist where the product is sold, the package will not break 
down into usable compost in a home compost pile or device. To avoid 
deception, the manufacturer should disclose that the package is not 
suitable for home composting.
    Example 4: A nationally marketed lawn and leaf bag is labeled 
``compostable.'' Also printed on the bag is a disclosure that the bag is 
not designed for use in home compost piles. The bags are in fact 
composted in yard trimmings composting programs in many communities 
around the country, but such programs are not available to a substantial 
majority of consumers or communities where the bag is sold. The claim is 
deceptive because reasonable consumers living in areas not served by 
yard trimmings programs may understand the reference to mean that 
composting facilities accepting the bags are available in their area. To 
avoid deception,

[[Page 186]]

the claim should be qualified to indicate the limited availability of 
such programs, for example, by stating, ``Appropriate facilities may not 
exist in your area.'' Other examples of adequate qualification of the 
claim include providing the approximate percentage of communities or the 
population for which such programs are available.
    Example 5: A manufacturer sells a disposable diaper that bears the 
legend, ``This diaper can be composted where solid waste composting 
facilities exist. There are currently [X number of] solid waste 
composting facilities across the country.'' The claim is not deceptive, 
assuming that composting facilities are available as claimed and the 
manufacturer can substantiate that the diaper can be converted safely to 
usable compost in solid waste composting facilities.
    Example 6: A manufacturer markets yard trimmings bags only to 
consumers residing in particular geographic areas served by county yard 
trimmings composting programs. The bags meet specifications for these 
programs and are labeled, ``Compostable Yard Trimmings Bag for County 
Composting Programs.'' The claim is not deceptive. Because the bags are 
compostable where they are sold, no qualification is required to 
indicate the limited availability of composting facilities.

    (d) Recyclable. It is deceptive to misrepresent, directly or by 
implication, that a product or package is recyclable. A product or 
package should not be marketed as recyclable unless it can be collected, 
separated or otherwise recovered from the solid waste stream for reuse, 
or in the manufacture or assembly of another package or product, through 
an established recycling program. Unqualified claims of recyclability 
for a product or package may be made if the entire product or package, 
excluding minor incidental components, is recyclable. For products or 
packages that are made of both recyclable and non-recyclable components, 
the recyclable claim should be adequately qualified to avoid consumer 
deception about which portions or components of the product or package 
are recyclable. Claims of recyclability should be qualified to the 
extent necessary to avoid consumer deception about any limited 
availability of recycling programs and collection sites. If an 
incidental component significantly limits the ability to recycle a 
product or package, a claim of recyclability would be deceptive. A 
product or package that is made from recyclable material, but, because 
of its shape, size or some other attribute, is not accepted in recycling 
programs for such material, should not be marketed as recyclable.\4\
---------------------------------------------------------------------------

    \4\ The Mercury-Containing and Rechargeable Battery Management Act 
establishes uniform national labeling requirements regarding certain 
types of nickel-cadmium rechargeable and small lead-acid rechargeable 
batteries to aid in battery collection and recycling. The Battery Act 
requires, in general, that the batteries must be labeled with the three-
chasing-arrows symbol or a comparable recycling symbol, and the 
statement ldquo;Battery Must Be Recycled Or Disposed Of Properly.'' 42 
U.S.C. 14322(b). Batteries labeled in accordance with this federal 
statute are deemed to be in compliance with these guides.

    Example 1: A packaged product is labeled with an unqualified claim, 
``recyclable.'' It is unclear from the type of product and other context 
whether the claim refers to the product or its package. The unqualified 
claim is likely to convey to reasonable consumers that all of both the 
product and its packaging that remain after normal use of the product, 
except for minor, incidental components, can be recycled. Unless each 
such message can be substantiated, the claim should be qualified to 
indicate what portions are recyclable.
    Example 2: A nationally marketed 8 oz. plastic cottage-cheese 
container displays the Society of the Plastics Industry (SPI) code 
(which consists of a design of arrows in a triangular shape containing a 
number and abbreviation identifying the component plastic resin) on the 
front label of the container, in close proximity to the product name and 
logo. The manufacturer's conspicuous use of the SPI code in this manner 
constitutes a recyclability claim. Unless recycling facilities for this 
container are available to a substantial majority of consumers or 
communities, the claim should be qualified to disclose the limited 
availability of recycling programs for the container. If the SPI code, 
without more, had been placed in an inconspicuous location on the 
container (e.g., embedded in the bottom of the container) it would not 
constitute a claim of recyclability.
    Example 3: A container can be burned in incinerator facilities to 
produce heat and power. It cannot, however, be recycled into another 
product or package. Any claim that the container is recyclable would be 
deceptive.
    Example 4: A nationally marketed bottle bears the unqualified 
statement that it is ``recyclable.'' Collection sites for recycling the 
material in question are not available to

[[Page 187]]

a substantial majority of consumers or communities, although collection 
sites are established in a significant percentage of communities or 
available to a significant percentage of the population. The unqualified 
claim is deceptive because, unless evidence shows otherwise, reasonable 
consumers living in communities not served by programs may conclude that 
recycling programs for the material are available in their area. To 
avoid deception, the claim should be qualified to indicate the limited 
availability of programs, for example, by stating ``This bottle may not 
be recyclable in your area,'' or ``Recycling programs for this bottle 
may not exist in your area.'' Other examples of adequate qualifications 
of the claim include providing the approximate percentage of communities 
or the population to whom programs are available.
    Example 5: A paperboard package is marketed nationally and labeled, 
``Recyclable where facilities exist.'' Recycling programs for this 
package are available in a significant percentage of communities or to a 
significant percentage of the population, but are not available to a 
substantial majority of consumers. The claim is deceptive because, 
unless evidence shows otherwise, reasonable consumers living in 
communities not served by programs that recycle paperboard packaging may 
understand this phrase to mean that such programs are available in their 
area. To avoid deception, the claim should be further qualified to 
indicate the limited availability of programs, for example, by using any 
of the approaches set forth in Example 4 above.
    Example 6: A foam polystyrene cup is marketed as follows: 
``Recyclable in the few communities with facilities for foam polystyrene 
cups.'' Collection sites for recycling the cup have been established in 
a half-dozen major metropolitan areas. This disclosure illustrates one 
approach to qualifying a claim adequately to prevent deception about the 
limited availability of recycling programs where collection facilities 
are not established in a significant percentage of communities or 
available to a significant percentage of the population. Other examples 
of adequate qualification of the claim include providing the number of 
communities with programs, or the percentage of communities or the 
population to which programs are available.
    Example 7: A label claims that the package ``includes some 
recyclable material.'' The package is composed of four layers of 
different materials, bonded together. One of the layers is made from the 
recyclable material, but the others are not. While programs for 
recycling this type of material are available to a substantial majority 
of consumers, only a few of those programs have the capability to 
separate the recyclable layer from the non-recyclable layers. Even 
though it is technologically possible to separate the layers, the claim 
is not adequately qualified to avoid consumer deception. An 
appropriately qualified claim would be, ``includes material recyclable 
in the few communities that collect multi-layer products.'' Other 
examples of adequate qualification of the claim include providing the 
number of communities with programs, or the percentage of communities or 
the population to which programs are available.
    Example 8: A product is marketed as having a ``recyclable'' 
container. The product is distributed and advertised only in Missouri. 
Collection sites for recycling the container are available to a 
substantial majority of Missouri residents, but are not yet available 
nationally. Because programs are generally available where the product 
is marketed, the unqualified claim does not deceive consumers about the 
limited availability of recycling programs.
    Example 9: A manufacturer of one-time use photographic cameras, with 
dealers in a substantial majority of communities, collects those cameras 
through all of its dealers. After the exposed film is removed for 
processing, the manufacturer reconditions the cameras for resale and 
labels them as follows: ``Recyclable through our dealership network.'' 
This claim is not deceptive, even though the cameras are not recyclable 
through conventional curbside or drop off recycling programs.
    Example 10: A manufacturer of toner cartridges for laser printers 
has established a recycling program to recover its cartridges 
exclusively through its nationwide dealership network. The company 
advertises its cartridges nationally as ``Recyclable. Contact your local 
dealer for details.'' The company's dealers participating in the 
recovery program are located in a significant number--but not a 
substantial majority--of communities. The ``recyclable'' claim is 
deceptive unless it contains one of the qualifiers set forth in Example 
4. If participating dealers are located in only a few communities, the 
claim should be qualified as indicated in Example 6.
    Example 11: An aluminum beverage can bears the statement ``Please 
Recycle.'' This statement is likely to convey to consumers that the 
package is recyclable. Because collection sites for recycling aluminum 
beverage cans are available to a substantial majority of consumers or 
communities, the claim does not need to be qualified to indicate the 
limited availability of recycling programs.

    (e) Recycled content. (1) A recycled content claim may be made only 
for materials that have been recovered or otherwise diverted from the 
solid waste stream, either during the manufacturing process (pre-
consumer), or after

[[Page 188]]

consumer use (post-consumer). To the extent the source of recycled 
content includes pre-consumer material, the manufacturer or advertiser 
must have substantiation for concluding that the pre-consumer material 
would otherwise have entered the solid waste stream. In asserting a 
recycled content claim, distinctions may be made between pre-consumer 
and post-consumer materials. Where such distinctions are asserted, any 
express or implied claim about the specific pre-consumer or post-
consumer content of a product or package must be substantiated.
    (2) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made of recycled material, which includes 
recycled raw material, as well as used, \5\ reconditioned and 
remanufactured components. Unqualified claims of recycled content may be 
made if the entire product or package, excluding minor, incidental 
components, is made from recycled material. For products or packages 
that are only partially made of recycled material, a recycled claim 
should be adequately qualified to avoid consumer deception about the 
amount, by weight, of recycled content in the finished product or 
package. Additionally, for products that contain used, reconditioned or 
remanufactured components, a recycled claim should be adequately 
qualified to avoid consumer deception about the nature of such 
components. No such qualification would be necessary in cases where it 
would be clear to consumers from the context that a product's recycled 
content consists of used, reconditioned or remanufactured components.
---------------------------------------------------------------------------

    \5\ The term ``used'' refers to parts that are not new and that have 
not undergone any type of remanufacturing and/or reconditioning.

    Example 1: A manufacturer routinely collects spilled raw material 
and scraps left over from the original manufacturing process. After a 
minimal amount of reprocessing, the manufacturer combines the spills and 
scraps with virgin material for use in further production of the same 
product. A claim that the product contains recycled material is 
deceptive since the spills and scraps to which the claim refers are 
normally reused by industry within the original manufacturing process, 
and would not normally have entered the waste stream.
    Example 2: A manufacturer purchases material from a firm that 
collects discarded material from other manufacturers and resells it. All 
of the material was diverted from the solid waste stream and is not 
normally reused by industry within the original manufacturing process. 
The manufacturer includes the weight of this material in its 
calculations of the recycled content of its products. A claim of 
recycled content based on this calculation is not deceptive because, 
absent the purchase and reuse of this material, it would have entered 
the waste stream.
    Example 3: A greeting card is composed 30% by fiber weight of paper 
collected from consumers after use of a paper product, and 20% by fiber 
weight of paper that was generated after completion of the paper-making 
process, diverted from the solid waste stream, and otherwise would not 
normally have been reused in the original manufacturing process. The 
marketer of the card may claim either that the product ``contains 50% 
recycled fiber,'' or may identify the specific pre-consumer and/or post-
consumer content by stating, for example, that the product ``contains 
50% total recycled fiber, including 30% post-consumer.''
    Example 4: A paperboard package with 20% recycled fiber by weight is 
labeled as containing ``20% recycled fiber.'' Some of the recycled 
content was composed of material collected from consumers after use of 
the original product. The rest was composed of overrun newspaper stock 
never sold to customers. The claim is not deceptive.
    Example 5: A product in a multi-component package, such as a 
paperboard box in a shrink-wrapped plastic cover, indicates that it has 
recycled packaging. The paperboard box is made entirely of recycled 
material, but the plastic cover is not. The claim is deceptive since, 
without qualification, it suggests that both components are recycled. A 
claim limited to the paperboard box would not be deceptive.
    Example 6: A package is made from layers of foil, plastic, and paper 
laminated together, although the layers are indistinguishable to 
consumers. The label claims that ``one of the three layers of this 
package is made of recycled plastic.'' The plastic layer is made 
entirely of recycled plastic. The claim is not deceptive provided the 
recycled plastic layer constitutes a significant component of the entire 
package.
    Example 7: A paper product is labeled as containing ``100% recycled 
fiber.'' The claim is not deceptive if the advertiser can substantiate 
the conclusion that 100% by weight of the fiber in the finished product 
is recycled.
    Example 8: A frozen dinner is marketed in a package composed of a 
cardboard box over a plastic tray. The package bears the legend,

[[Page 189]]

``package made from 30% recycled material.'' Each packaging component 
amounts to one-half the weight of the total package. The box is 20% 
recycled content by weight, while the plastic tray is 40% recycled 
content by weight. The claim is not deceptive, since the average amount 
of recycled material is 30%.
    Example 9: A paper greeting card is labeled as containing 50% 
recycled fiber. The seller purchases paper stock from several sources 
and the amount of recycled fiber in the stock provided by each source 
varies. Because the 50% figure is based on the annual weighted average 
of recycled material purchased from the sources after accounting for 
fiber loss during the production process, the claim is permissible.
    Example 10: A packaged food product is labeled with a three-chasing-
arrows symbol without any further explanatory text as to its meaning. By 
itself, the symbol is likely to convey that the packaging is both 
``recyclable'' and is made entirely from recycled material. Unless both 
messages can be substantiated, the claim should be qualified as to 
whether it refers to the package's recyclability and/or its recycled 
content. If a ``recyclable'' claim is being made, the label may need to 
disclose the limited availability of recycling programs for the package. 
If a recycled content claim is being made and the packaging is not made 
entirely from recycled material, the label should disclose the 
percentage of recycled content.
    Example 11: A laser printer toner cartridge containing 25% recycled 
raw materials and 40% reconditioned parts is labeled ``65% recycled 
content; 40% from reconditioned parts.'' This claim is not deceptive.
    Example 12: A store sells both new and used sporting goods. One of 
the items for sale in the store is a baseball helmet that, although 
used, is no different in appearance than a brand new item. The helmet 
bears an unqualified ``Recycled'' label. This claim is deceptive 
because, unless evidence shows otherwise, consumers could reasonably 
believe that the helmet is made of recycled raw materials, when it is in 
fact a used item. An acceptable claim would bear a disclosure clearly 
stating that the helmet is used.
    Example 13: A manufacturer of home electronics labels its video 
cassette recorders (``VCRs'') as ``40% recycled.'' In fact, each VCR 
contains 40% reconditioned parts. This claim is deceptive because 
consumers are unlikely to know that the VCR's recycled content consists 
of reconditioned parts.
    Example 14: A dealer of used automotive parts recovers a serviceable 
engine from a vehicle that has been totaled. Without repairing, 
rebuilding, remanufacturing, or in any way altering the engine or its 
components, the dealer attaches a ``Recycled'' label to the engine, and 
offers it for resale in its used auto parts store. In this situation, an 
unqualified recycled content claim is not likely to be deceptive because 
consumers are likely to understand that the engine is used and has not 
undergone any rebuilding.
    Example 15: An automobile parts dealer purchases a transmission that 
has been recovered from a junked vehicle. Eighty-five percent by weight 
of the transmission was rebuilt and 15% constitutes new materials. After 
rebuilding \6\ the transmission in accordance with industry practices, 
the dealer packages it for resale in a box labeled ``Rebuilt 
Transmission,'' or ``Rebuilt Transmission (85% recycled content from 
rebuilt parts),'' or ``Recycled Transmission (85% recycled content from 
rebuilt parts).'' These claims are not likely to be deceptive.
---------------------------------------------------------------------------

    \6\ The term ``rebuilding'' means that the dealer dismantled and 
reconstructed the transmission as necessary, cleaned all of its internal 
and external parts and eliminated rust and corrosion, restored all 
impaired, defective or substantially worn parts to a sound condition (or 
replaced them if necessary), and performed any operations required to 
put the transmission in sound working condition.

    (f) Source reduction: It is deceptive to misrepresent, directly or 
by implication, that a product or package has been reduced or is lower 
in weight, volume or toxicity. Source reduction claims should be 
qualified to the extent necessary to avoid consumer deception about the 
amount of the source reduction and about the basis for any comparison 
---------------------------------------------------------------------------
asserted.

    Example 1: An ad claims that solid waste created by disposal of the 
advertiser's packaging is ``now 10% less than our previous package.'' 
The claim is not deceptive if the advertiser has substantiation that 
shows that disposal of the current package contributes 10% less waste by 
weight or volume to the solid waste stream when compared with the 
immediately preceding version of the package.
    Example 2: An advertiser notes that disposal of its product 
generates ``10% less waste.'' The claim is ambiguous. Depending on 
contextual factors, it could be a comparison either to the immediately 
preceding product or to a competitor's product. The ``10% less waste'' 
reference is deceptive unless the seller clarifies which comparison is 
intended and substantiates that comparison, or substantiates both 
possible interpretations of the claim.

    (g) Refillable: It is deceptive to misrepresent, directly or by 
implication, that a package is refillable. An unqualified refillable 
claim should not be asserted unless a system is provided for

[[Page 190]]

the collection and return of the package for refill or the later refill 
of the package by consumers with product subsequently sold in another 
package. A package should not be marketed with an unqualified refillable 
claim, if it is up to the consumer to find new ways to refill the 
package.

    Example 1: A container is labeled ``refillable x times.'' The 
manufacturer has the capability to refill returned containers and can 
show that the container will withstand being refilled at least x times. 
The manufacturer, however, has established no collection program. The 
unqualified claim is deceptive because there is no means for collection 
and return of the container to the manufacturer for refill.
    Example 2: A bottle of fabric softener states that it is in a 
``handy refillable container.'' The manufacturer also sells a large-
sized container that indicates that the consumer is expected to use it 
to refill the smaller container. The manufacturer sells the large-sized 
container in the same market areas where it sells the small container. 
The claim is not deceptive because there is a means for consumers to 
refill the smaller container from larger containers of the same product.

    (h) Ozone safe and ozone friendly: It is deceptive to misrepresent, 
directly or by implication, that a product is safe for or ``friendly'' 
to the ozone layer or the atmosphere. For example, a claim that a 
product does not harm the ozone layer is deceptive if the product 
contains an ozone-depleting substance.

    Example 1: A product is labeled ``ozone friendly.'' The claim is 
deceptive if the product contains any ozone-depleting substance, 
including those substances listed as Class I or Class II chemicals in 
Title VI of the Clean Air Act Amendments of 1990, Public Law 101-549, 
and others subsequently designated by EPA as ozone-depleting substances. 
Chemicals that have been listed or designated as Class I are 
chlorofluorocarbons (CFCs), halons, carbon tetrachloride, 1,1,1-
trichloroethane, methyl bromide and hydrobromofluorocarbons (HBFCs). 
Chemicals that have been listed as Class II are hydrochlorofluorocarbons 
(HCFCs).
    Example 2: An aerosol air freshener is labeled ``ozone friendly.'' 
Some of the product's ingredients are volatile organic compounds (VOCs) 
that may cause smog by contributing to ground-level ozone formation. The 
claim is likely to convey to consumers that the product is safe for the 
atmosphere as a whole, and is therefore, deceptive.
    Example 3: The seller of an aerosol product makes an unqualified 
claim that its product ``Contains no CFCs.'' Although the product does 
not contain CFCs, it does contain HCFC-22, another ozone depleting 
ingredient. Because the claim ``Contains no CFCs'' may imply to 
reasonable consumers that the product does not harm the ozone layer, the 
claim is deceptive.
    Example 4: A product is labeled ``This product is 95% less damaging 
to the ozone layer than past formulations that contained CFCs.'' The 
manufacturer has substituted HCFCs for CFC-12, and can substantiate that 
this substitution will result in 95% less ozone depletion. The qualified 
comparative claim is not likely to be deceptive.

[57 FR 36363, Aug. 13, 1992, as amended at 61 FR 53318, Oct. 11, 1996; 
61 FR 67109, Dec. 19, 1996; 63 FR 24248, May 1, 1998]



Sec. 260.8  Environmental assessment.

    (a) National Environmental Policy Act. In accordance with section 
1.83 of the FTC's Procedures and Rules of Practice \7\ and section 
1501.3 of the Council on Environmental Quality's regulations for 
implementing the procedural provisions of National Environmental Policy 
Act, 42 U.S.C. 4321 et seq. (1969), \8\ the Commission prepared an 
environmental assessment when the guides were issued in July 1992 for 
purposes of providing sufficient evidence and analysis to determine 
whether issuing the Guides for the Use of Environmental Marketing Claims 
required preparation of an environmental impact statement or a finding 
of no significant impact. After careful study, the Commission concluded 
that issuance of the Guides would not have a significant impact on the 
environment and that any such impact ``would be so uncertain that 
environmental analysis would be based on speculation.'' \9\ The 
Commission concluded that an environmental impact statement was 
therefore not required. The Commission based its conclusions on the 
findings in the environmental assessment that issuance of the guides 
would have no quantifiable environmental impact because the guides are 
voluntary in nature, do not preempt inconsistent state laws, are based 
on the FTC's deception policy, and, when used in conjunction with the 
Commission's policy of case-by-case enforcement, are

[[Page 191]]

intended to aid compliance with section 5(a) of the FTC Act as that Act 
applies to environmental marketing claims.
---------------------------------------------------------------------------

    \7\ 16 CFR 1.83.
    \8\ 40 CFR 1501.3.
    \9\ 16 CFR 1.83(a).
---------------------------------------------------------------------------

    (b) The Commission has concluded that the modifications to the 
guides in this part will not have a significant effect on the 
environment, for the same reasons that the issuance of the original 
guides in 1992 and the modifications to the guides in 1996 were deemed 
not to have a significant effect on the environment. Therefore, the 
Commission concludes that an environmental impact statement is not 
required in conjunction with the issuance of the 1998 modifications to 
the Guides for the Use of Environmental Marketing Claims.

[63 FR 24251, May 1, 1998, as amended at 63 FR 24248, May 1, 1998]

[[Page 192]]



        SUBCHAPTER C_REGULATIONS UNDER SPECIFIC ACTS OF CONGRESS





PART 300_RULES AND REGULATIONS UNDER THE WOOL PRODUCTS LABELING ACT 
OF 1939--Table of Contents




                               Definitions

Sec.
300.1 Terms defined.

                                Labeling

300.2 General requirement.
300.3 Required label information.
300.4 Registered identification numbers.
300.5 Required label and method of affixing.
300.6 Labels to be avoided.
300.7 English language requirement.
300.8 Use of fiber trademark and generic names.
300.9 Abbreviations, ditto marks, and asterisks.
300.10 Disclosure of information on labels.
300.11 Improper methods of labeling.
300.12 Labeling of pairs or products containing two or more units.
300.13 Name or other identification required to appear on labels.
300.14 Substitute label requirement.
300.15 Labeling of containers or packaging of wool products.
300.16 Ornamentation.
300.17 Use of the term ``all'' or ``100%''.
300.18 Use of name of specialty fiber.
300.19 Use of terms ``mohair'' and ``cashmere''.
300.20 Use of the terms ``virgin'' or ``new''.
300.21 Marking of samples, swatches, or specimens.
300.22 Sectional disclosure of content.
300.23 Linings, paddings, stiffening, trimmings and facings.
300.24 Representations as to fiber content.
300.25 Country where wool products are processed or manufactured.
300.25a Country of origin in mail order advertising.
300.26 Pile fabrics and products composed thereof.
300.27 Wool products containing superimposed or added fibers.
300.28 Undetermined quantities of reclaimed fibers.
300.29 Garments or products composed of or containing miscellaneous 
          cloth scraps.
300.30 Deceptive labeling in general.

                         Manufacturers' Records

300.31 Maintenance of records.

                               Guarantees

300.32 Form of separate guaranty.
300.33 Continuing guaranty filed with Federal Trade Commission.
300.34 Reference to existing guaranty on labels not permitted.

                                 General

300.35 Hearings under section 4(d) of the act.

    Authority: 15 U.S.C. 68 et seq. and 15 U.S.C. 70 et seq.

    Source: 6 FR 3426, July 15, 1941, unless otherwise noted.

                               Definitions



Sec. 300.1  Terms defined.

    (a) The term Act means the Wool Products Labeling Act of 1939 
(approved October 14, 1940, Public No. 850, 76th Congress, Third 
Session, 54 Stat. 1128, 15 U.S.C. 68 et. seq. as amended by Pub. L. 96-
242, 94 Stat. 344).
    (b) The terms rule, rules, regulations and rules and regulations 
mean the rules and regulations prescribed by the Commission pursuant to 
the Act.
    (c) The term ornamentation means any fibers or yarns imparting a 
visibly discernible pattern or design to a yarn or fabric.
    (d) The term fiber trademark means a word or words used by a person 
to identify a particular fiber produced or sold by him and to 
distinguish it from fibers of the same generic class produced or sold by 
others. Such term shall not include any trademark, product mark, house 
mark, trade name or other name which does not identify a particular 
fiber.
    (e) The terms required information or information required mean such 
information as is required to be disclosed on the required stamp, tag, 
label or other means of identification under the Act and regulations.
    (f) The definitions of terms contained in section 2 of the Act shall 
be applicable also to such terms when used in rules promulgated under 
the Act.
    (g) The term United States means the several States, the District of 
Columbia, and the territories and possessions of the United States.
    (h) The terms mail order catalog and mail order promotional material 
mean

[[Page 193]]

any materials, used in the direct sale or direct offering for sale of 
wool products, that are disseminated to ultimate consumers in print or 
by electronic means, other than by broadcast, and that solicit ultimate 
consumers to purchase such wool products by mail, telephone, electronic 
mail, or some other method without examining the actual product 
purchased.
    (i) The terms label, labels, labeled, and labeling mean the stamp, 
tag, label, or other means of identification, or authorized substitute 
therefore, required to be on or affixed to wool products by the Act or 
Regulations and on which the information required is to appear.
    (j) The terms invoice and invoice or other paper have the meaning 
set forth in Sec. 303.1(h) of this chapter.
    (k) The term trimmings has the meaning set forth in Sec. 303.12 of 
this chapter.

[29 FR 6623, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 50 
FR 15105, Apr. 17, 1985; 63 FR 7516, Feb. 13, 1998]

                                Labeling



Sec. 300.2  General requirement.

    Each and every wool product subject to the act shall be marked by a 
stamp, tag, label, or other means of identification, in conformity with 
the requirements of the act and the rules and regulations thereunder.



Sec. 300.3  Required label information.

    (a) The marking of wool products under the Act shall be in the form 
of a stamp, tag, label or other means of identification, showing and 
displaying upon the product the required information legibly, 
conspicuously, and nondeceptively. The information required to be shown 
and displayed upon the product in the stamp, tag, label, or other mark 
of identification, shall be that which is required by the Act and the 
rules and regulations thereunder, including the following:
    (1) The fiber content of the product specified in section 4(a)(2)(A) 
of the Act. The generic names and percentages by weight of the 
constituent fibers present in the wool product, exclusive of permissive 
ornamentation, shall appear on such label with any percentage of fiber 
or fibers designated as ``other fiber'' or ``other fibers'' as provided 
by section 4(a)(2)(A)(5) of the Act appearing last.
    (2) The maximum percentage of the total weight of the wool product 
of any nonfibrous loading, filling or adulterating matter as prescribed 
by section 4(a)(2)(B) of the Act.
    (3) The name or registered identification number issued by the 
Commission of the manufacturer of the wool product or the name or 
registered identification number of one or more persons subject to 
section 3 of the Act with respect to such wool product.
    (4) The name of the country where the wool product was processed or 
manufactured.
    (b) In disclosing the constituent fibers in information required by 
the Act and regulations in this part or in any non-required information, 
no fiber present in the amount of less than 5 percent shall be 
designated by its generic name or fiber trademark but shall be 
designated as ``other fiber,'' except that the percentage of wool or 
recycled wool shall always be stated, in accordance with section 
4(a)(2)(A) of the Act. When more than one of such fibers, other than 
wool or recycled wool, are present in amounts of less than 5 percent, 
they shall be designated in the aggregate as ``other fibers.'' Provided, 
however, that nothing in this section shall prevent the disclosure of 
any fiber present in the product which has a clearly established and 
definite functional significance when present in the amount stated, as 
for example:

``98% wool
2% nylon.''

[29 FR 6623, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 50 
FR 15105, Apr. 17, 1985; 63 FR 7516, Feb. 13, 1998]



Sec. 300.4  Registered identification numbers.

    (a) A registered identification number assigned by the Federal Trade 
Commission under and in accordance with the provisions of this section 
may be used upon the stamp, tag, label, or other mark of identification 
required under the Act to be affixed to a wool product, as and for the 
name of the person to whom such number has been assigned.

[[Page 194]]

    (b) Any manufacturer of a wool product or person subject to section 
3 of the Act with respect to such wool product, residing in the United 
States, may apply to the Federal Trade Commission for a registered 
identification number for use by the applicant on the stamp, tag, label, 
or other mark of identification required under the Act.
    (c) Registered identification numbers shall be used only by the 
person or firm to whom they are issued, and such numbers are not 
transferable or assignable. Registered identification numbers shall be 
subject to cancellation whenever any such number was procured or has 
been used improperly or contrary to the requirements of the Acts 
administered by the Federal Trade Commission, and regulations in this 
part, or when otherwise deemed necessary in the public interest. 
Registered identification numbers shall be subject to cancellation if 
the Commission fails to receive prompt notification of any change in 
name, business address, or legal business status of a person or firm to 
whom a registered identification number has been assigned, by 
application duly executed in the form set out in paragraph (e) of this 
section, reflecting the current name, business address, and legal 
business status of the person or firm.
    (d) Registered identification numbers assigned under this section 
may be used on labels required in labeling products subject to the 
provisions of the Fur Products Labeling Act and Textile Fiber Products 
Identification Act, and numbers previously assigned by the Commission 
under such Acts may be used as and for the required name in labeling 
under this Act. When so used by the person or firm to whom assigned, the 
use of the numbers shall be construed as identifying and binding the 
applicant as fully and in all respects as though assigned under the 
specific Act for which it is used.
    (e) The form to apply for a registered identification number or to 
update information pertaining to an existing number is found in Sec. 
303.20(d) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580, or on the Internet at 
http://www.ftc.gov.

[29 FR 6623, May 21, 1964, as amended at 48 FR 12516, Mar. 25, 1983; 63 
FR 7516, Feb. 13, 1998; 63 FR 71582, Dec. 28, 1998; 65 FR 75156, Dec. 1, 
2000]



Sec. 300.5  Required label and method of affixing.

    (a) A label is required to be affixed to each wool product and, 
where required, to its package or container in a secure manner. Such 
label shall be conspicuous and shall be of such durability as to remain 
attached to the product and its package throughout any distribution, 
sale, resale and until sold and delivered to the ultimate consumer.
    (b) Each wool product with a neck must have a label disclosing the 
country of origin affixed to the inside center of the neck midway 
between the shoulder seams or in close proximity to another label 
affixed to the inside center of the neck. The fiber content and RN or 
name of the company may be disclosed on the same label as the country of 
origin or on another conspicuous and readily accessible label or labels 
on the inside or outside of the garment. On all other wool products, the 
required information shall be disclosed on a conspicuous and readily 
accessible label or labels on the inside or outside of the product. The 
country of origin disclosure must always appear on the front side of the 
label. Other required information may appear either on the front side or 
the reverse side of a label, provided that the information is 
conspicuous and readily accessible.
    (c) In the case of hosiery products, this section does not require 
affixing a label to each hosiery product contained in a package if, (1) 
such hosiery products are intended for sale to the ultimate consumer in 
such package, (2) such package has affixed to it a label bearing the 
required information for the hosiery products contained in the package, 
and (3) the information on the label affixed to the package is equally 
applicable to each wool product contained therein.

[50 FR 15105, Apr. 17, 1985, as amended at 63 FR 7516, Feb. 13, 1998]

[[Page 195]]



Sec. 300.6  Labels to be avoided.

    Stamps, tags, labels, or other marks of identification, which are 
insecurely attached, or which in the course of offering the product for 
sale, selling, reselling, transporting, marketing, or handling incident 
thereto are likely to become detached, indistinct, obliterated, 
illegible, mutilated, inaccessible, or inconspicuous, shall not be used.



Sec. 300.7  English language requirement.

    All words, statements and other information required by or under 
authority of the Act and the rules and regulations thereunder to appear 
on the stamp, tag, label, or other mark of identification, shall appear 
in the English language. If the product bears any stamp, tag, label, or 
mark of identification which contains any of the required information in 
a language other than English, all of the required information shall 
appear both in such other language and in the English language.



Sec. 300.8  Use of fiber trademark and generic names.

    (a) Except where another name is required or permitted under the Act 
or regulations, the respective common generic name of the fiber shall be 
used when naming fibers in the required information; as for example, 
``wool,'' ``recycled wool,'' ``cotton,'' ``rayon,'' ``silk,'' ``linen,'' 
``acetate,'' ``nylon,'' ``polyester.''
    (b) The generic names of manufactured fibers as heretofore or 
hereafter established in Sec. 303.7 of this part (Rule 7) of the 
regulations promulgated under the Textile Fiber Products Identification 
Act (72 Stat. 1717; 15 U.S.C. 70) shall be used in setting forth the 
required fiber content information as to wool products.
    (c) A non-deceptive fiber trademark may be used on a label in 
conjunction with the generic name of the fiber to which it relates. 
Where such a trademark is placed on a label in conjunction with the 
required information, the generic name of the fiber must appear in 
immediate conjunction therewith, and such trademark and generic name 
must appear in type or lettering of equal size and conspicuousness.
    (d) Where a generic name or a fiber trademark is used on any label, 
whether required or nonrequired, a full and complete fiber content 
disclosure with percentages shall be made on such label in accordance 
with the Act and regulations.
    (e) If a fiber trademark is not used in the required information, 
but is used elsewhere on the label as nonrequired information, the 
generic name of the fiber shall accompany the fiber trademark in legible 
and conspicuous type or lettering the first time the trademark is used.
    (f) No fiber trademark or generic name or word, coined word, symbol 
or depiction which connotes or implies any fiber trademark or generic 
name shall be used on any label or elsewhere on the product in such a 
manner as to be false, deceptive, or misleading as to fiber content, or 
to indicate directly or indirectly that a wool product is composed 
wholly or in part of a particular fiber, when such is not the case.
    (g) The term fur fiber may be used to describe the hair or fur fiber 
or mixtures thereof of any animal or animals other than the sheep, lamb, 
Angora goat, Cashmere goat, camel, alpaca, llama and vicuna. If the 
name, symbol, or depiction of any animal producing the hair or fur fiber 
is used on the stamp, tag, label, or other means of identification 
applied or affixed to the wool product, the percentage by weight of such 
hair or fur fiber in the total fiber weight of the wool product shall be 
separately stated in the required fiber content disclosure: Provided, 
That no such name, symbol or depiction shall be used where such hair or 
fur fiber is present in the amount of less than five per centum of the 
total fiber weight. No such name, symbol or depiction shall be used in 
such a way as to imply in any manner that a wool product contains the 
fur or hair of an animal when the hair or fur fiber of such animal is 
not present in the product in the amount of five per centum or more of 
the total fiber weight. The following are examples of fiber content 
disclosures under this paragraph:

60% Wool
40% Fur Fiber
 or
60% Wool
30% Fur Fiber
10% Angora Rabbit

[[Page 196]]

 or
100% Cashgora Hair
 or
100% Paco-Vicuna Hair

[29 FR 6624, May 21, 1964, as amended at 45 FR 44261, July 1, 1980; 63 
FR 7516, Feb. 13, 1998]



Sec. 300.9  Abbreviations, ditto marks, and asterisks.

    (a) In disclosing required information, words or terms shall not be 
designated by ditto marks or appear in footnotes referred to by 
asterisks or other symbols in required information, and shall not be 
abbreviated.
    (b) Where the generic name of a textile fiber is required to appear 
in immediate conjunction with a fiber trademark, a disclosure of the 
generic name by means of a footnote, to which reference is made by use 
of an asterisk or other symbol placed next to the fiber trademark, shall 
not be sufficient in itself to constitute compliance with the Act and 
regulations.

[29 FR 6624, May 21, 1964]



Sec. 300.10  Disclosure of information on labels.

    (a) Subject to the provisions of Sec. 300.5(b), the required 
information may appear on any label or labels attached to the product, 
including the care label required by 16 CFR part 423, provided all the 
pertinent requirements of the Act and regulations in this part are met 
and so long as the combination of required information and non-required 
information is not misleading. All parts of the required information 
shall be set forth in such a manner as to be clearly legible, 
conspicuous, and readily accessible to the prospective purchaser. All 
parts of the required fiber content information shall appear in type or 
lettering of equal size and conspicuousness.
    (b) Subject to the provisions of Sec. 300.8, any non-required 
information or representations placed on the product shall not minimize, 
detract from, or conflict with required information and shall not be 
false, deceptive, or misleading.

[63 FR 7517, Feb. 13, 1998]



Sec. 300.11  Improper methods of labeling.

    The stamp, tag, label, or other mark of identification required 
under the act, or the required information contained therein, shall not 
be minimized, rendered obscure or inconspicuous, or be so placed as 
likely to be unnoticed or unseen by purchasers and purchaser-consumers 
when the product is offered or displayed for sale or sold to purchasers 
or the consuming public, by reason of, among others:
    (a) Small or indistinct type.
    (b) Failure to use letters and numerals of equal size and 
conspicuousness in naming all fibers and percentages of such fibers as 
required by the act.
    (c) Insufficient background contrast.
    (d) Crowding, intermingling, or obscuring with designs, vignettes, 
or other written, printed or graphic matter.



Sec. 300.12  Labeling of pairs or products containing two or more 
units.

    (a) Where a wool product consists of two or more parts, units, or 
items of different fiber content, a separate label containing the 
required information shall be affixed to each of such parts, units, or 
items showing the required information as to such part, unit, or item, 
provided that where such parts, units, or items, are marketed or handled 
as a single product or ensemble and are sold and delivered to the 
ultimate consumer as a single product or ensemble, the required 
information may be set out on a single label in such a manner as to 
separately show the fiber composition of each part, unit, or item.
    (b) Where garments, wearing apparel, or other wool products are 
marketed or handled in pairs or ensembles of the same fiber content, 
only one unit of the pair or ensemble need be labeled with the required 
information when sold and delivered to the ultimate consumer.
    (c) Where parts or units of wool products of the types referred to 
in paragraphs (a) and (b) of this section are sold separately, such 
parts or units shall be labeled with the information required by the Act 
and regulations.

[29 FR 6624, May 21, 1964]

[[Page 197]]



Sec. 300.13  Name or other identification required to appear on labels.

    (a) The name required by the Act to be used on labels shall be the 
name under which the manufacturer of the wool product or other person 
subject to section 3 of the Act with respect to such product is doing 
business. Trade names, trade marks or other names which do not 
constitute the name under which such person is doing business shall not 
be used for required identification purposes.
    (b) Registered identification numbers, as provided for in Sec. 
300.4 of this part (Rule 4), may be used for identification purposes in 
lieu of the required name.

[29 FR 6625, May 21, 1964]



Sec. 300.14  Substitute label requirement.

    When necessary to avoid deception, the name of any person other than 
the manufacturer of the product appearing on the stamp, tag, label, or 
other mark of identification affixed to such product shall be 
accompanied by appropriate words showing that the product was not 
manufactured by such person; as for example:

Manufactured for: --------------
Distributed by: --------------
------------------ Distributors



Sec. 300.15  Labeling of containers or packaging of wool products.

    When wool products are marketed and delivered in a package which is 
intended to remain unbroken and intact until after delivery to the 
ultimate consumer, each wool product in the package, except hosiery, and 
the package shall be labeled with the required information. If the 
package is transparent to the extent it allows for a clear reading of 
the required information on the wool product, the package is not 
required to be labeled.

[50 FR 15106, Apr. 17, 1985]



Sec. 300.16  Ornamentation.

    (a) Where the wool product contains fiber ornamentation not 
exceeding 5 percent of the total fiber weight of the product and the 
stated percentages of fiber content of the product are exclusive of such 
ornamentation, the stamp, tag, label, or other means of identification 
shall contain a phrase or statement showing such fact; as for example:

50% Wool
25% Recycled Wool
25% Cotton
Exclusive of Ornamentation


The fiber content of such ornamentation may be disclosed where the 
percentage of the ornamentation in relation to the total fiber weight of 
the principal fiber or blend of fibers is shown; as for example:

70% Recycled Wool
30% Acetate
Exclusive of 4% Metallic Ornamentation

    (b) Where the fiber ornamentation exceeds five per centum it shall 
be included in the statement of required percentages of fiber content.
    (c) Where the ornamentation constitutes a distinct section of the 
product, sectional disclosure may be made in accordance with Sec. 
300.23 of this part (Rule 23).

[29 FR 6625, May 21, 1964, as amended at 45 FR 44261, July 1, 1980]



Sec. 300.17  Use of the term ``all'' or ``100%.''

    Where the fabric or product to which the stamp, tag, label, or mark 
of identification applies is composed wholly of one kind of fiber, 
either the word all or the term 100% may be used with the correct fiber 
name; as for example ``100% Wool,'' ``All Wool,'' ``100% Recycled 
Wool,'' ``All Recycled Wool.'' If any such product is composed wholly of 
one fiber with the exception of fiber ornamentation not exceeding 5%, 
such term ``all'' or ``100%'' as qualifying the name of the fiber may be 
used, provided it is immediately followed by the phrase ``exclusive of 
ornamentation,'' or by a phrase of like meaning; such as, for example:

All Wool--Exclusive of Ornamentation

 or

100% Wool--Exclusive of Ornamentation.

[45 FR 44261, July 1, 1980]



Sec. 300.18  Use of name of specialty fiber.

    (a) In setting forth the required fiber content of a product 
containing any of the specialty fibers named in Section

[[Page 198]]

2(b) of the Act, the name of the specialty fiber present may be used in 
lieu of the word ``wool,'' provided the percentage of each named 
specialty fiber is given, and provided further that the name of the 
specialty fiber so used is qualified by the word ``recycled'' when the 
fiber referred to is ``recycled wool'' as defined in the Act. The 
following are examples of fiber content designation permitted under this 
rule:

55% Alpaca--45% Camel Hair
50% Recycled Camel Hair--50% Wool
60% Recycled Alpaca--40% Rayon
35% Recycled Llama--35% Recycled Vicuna--30% Cotton
60% Cotton--40% Recycled Llama.

    (b) Where an election is made to use the name of a specialty fiber 
in lieu of the word ``wool'' in describing such specialty fiber, such 
name shall be used at any time reference is made to the specialty fiber 
either in required or nonrequired information. The name of the specialty 
fiber or any word, coined word, symbol or depiction connoting or 
implying the presence of such specialty fiber shall not be used in 
nonrequired information on the required label or on any secondary or 
auxiliary label attached to the wool product if the name of such 
specialty fiber does not appear in the required fiber content 
disclosure.

[29 FR 6625, May 21, 1964, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.19  Use of terms ``mohair'' and ``cashmere.''

    (a) In setting forth the required fiber content of a product 
containing hair of the Angora goat known as mohair or containing hair or 
fleece of the Cashmere goat known as cashmere, the term mohair or 
cashmere, respectively, may be used for such fiber in lieu of the word 
``wool,'' provided the respective percentage of each such fiber 
designated as ``mohair'' or ``cashmere'' is given, and provided further 
that such term ``mohair'' or ``cashmere'' where used is qualified by the 
word ``recycled'' when the fiber referred to is ``recycled wool'' as 
defined in the Act. The following are examples of fiber content 
designations permitted under this rule:

50% Mohair--50% Wool
60% Recycled Mohair--40% Cashmere
60% Cotton--40% Recycled Cashmere.

    (b) Where an election is made to use the term ``mohair'' or 
``cashmere'' in lieu of the term wool as permitted by this section, the 
appropriate designation of ``mohair'' or ``cashmere'' shall be used at 
any time reference is made to such fiber in either required or 
nonrequired information. The term ``mohair'' or ``cashmere'' or any 
words, coined words, symbols or depictions connoting or implying the 
presence of such fibers shall not be used in nonrequired information on 
the required label or on any secondary or auxiliary label attached to 
the wool product if the term ``mohair'' or ``cashmere'' as the case may 
be does not appear in the required fiber content disclosure.

[29 FR 6625, May 21, 1964, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.20  Use of the terms ``virgin'' or ``new.''

    The terms ``virgin'' or ``new'' as descriptive of a wool product, or 
any fiber or part thereof, shall not be used when the product or part so 
described is not composed wholly of new or virgin fiber which has never 
been reclaimed from any spun, woven, knitted, felted, braided, bonded, 
or otherwise manufactured or used product.

[29 FR 6625, May 21, 1964]



Sec. 300.21  Marking of samples, swatches or specimens.

    Where samples, swatches or specimens of wool products subject to the 
act were used to promote or effect sales of such wool products in 
commerce, said samples, swatches and specimens, as well as the products 
themselves, shall be labeled or marked to show their respective fiber 
contents and other information required by law.

[6 FR 3426, July 15, 1941. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.22  Sectional disclosure of content.

    (a) Permissive. Where a wool product is composed of two or more 
sections which are of different fiber composition, the required 
information as to fiber content may be separated on the same label in 
such manner as to show the fiber composition of each section.

[[Page 199]]

    (b) Mandatory. The disclosure as above provided shall be made in all 
instances where such form of marking is necessary to avoid deception.

[29 FR 6626, May 21, 1964. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.23  Linings, paddings, stiffening, trimmings and facings.

    (a) In labeling or marking garments or articles of apparel which are 
wool products, the fiber content of any linings, paddings, stiffening, 
trimmings or facings of such garments or articles of apparel shall be 
given and shall be set forth separately and distinctly in the stamp, 
tag, label, or other mark of identification of the products.
    (1) If such linings, trimmings or facings contain, purport to 
contain or are represented as containing wool, or recycled wool; or
    (2) If such linings are metallically coated, or coated or laminated 
with any substance for warmth, or if such linings are composed of pile 
fabrics, or any fabrics incorporated for warmth or represented directly 
or by implication as being incorporated for warmth, which articles the 
Commission finds constitute a class of articles which is customarily 
accompanied by express or implied representations of fiber content; or
    (3) If any express or implied representations of fiber content of 
any of such linings, paddings, stiffening, trimmings or facings are 
customarily made.
    (b) In the case of garments which contain interlinings, the fiber 
content of such interlinings shall be set forth separately and 
distinctly as part of the required information on the stamp, tag, label, 
or other mark of identification of such garment. For purposes of this 
paragraph (b) the term interlining means any fabric or fibers 
incorporated into a garment or article of wearing apparel as a layer 
between an outershell and an inner lining.
    (c) In the case of wool products which are not garments or articles 
of apparel, but which contain linings, paddings, stiffening, trimmings, 
or facings, the stamp, tag, label, or other mark of identification of 
the product shall show the fiber content of such linings, paddings, 
stiffening, trimmings or facings, set forth separately and distinctly in 
such stamp, tag, label, or other mark of identification.
    (d) Wool products which are or have been manufactured for sale or 
sold for use as linings, interlinings, paddings, stiffening, trimmings 
or facings, but not contained in a garment, article of apparel, or other 
product, shall be labeled or marked with the required information as in 
the case of other wool products.

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980. 
Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.24  Representations as to fiber content.

    (a) Words, coined words, symbols, or depictions which constitute or 
imply the name or designation of a fiber which is not present in the 
product shall not appear on labels. Any word or coined word which is 
phonetically similar to the name or designation of a fiber or which is 
only a slight variation in spelling from the name or designation of a 
fiber shall not be used in such a manner as to represent or imply that 
such fiber is present in the product when the fiber is not present as 
represented.
    (b) Where a word, coined word, symbol or depiction which connotes or 
implies the presence of a fiber is used on any label, whether required 
or nonrequired, a full and complete fiber content disclosure with 
percentages shall be made on such label in accordance with the Act and 
regulations.

[29 FR 6626, May 21, 1964, as amended at 50 FR 15106, Apr. 17, 1985. 
Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.25  Country where wool products are processed or manufactured.

    (a) In addition to the other information required by the Act and 
Regulations:
    (1) Each imported wool product shall be labeled with the name of the 
country where such imported product was processed or manufactured;
    (2) Each wool product completely made in the United States of 
materials that were made in the United States shall be labeled using the 
term Made in U.S.A. or some other clear and equivalent term.

[[Page 200]]

    (3) Each wool product made in the United States, either in whole or 
in part of imported materials, shall contain a label disclosing these 
facts; for example:

``Made in USA of imported fabric''

 or

``Knitted in USA of imported yarn'' and

    (4) Each wool product partially manufactured in a foreign country 
and partially manufactured in the United States shall contain on a label 
the following information:
    (i) The manufacturing process in the foreign country and in the USA; 
for example:

``Imported cloth, finished in USA''

 or

``Sewn in USA of imported components''

 or

``Made in [foreign country], finished in USA''

 or

``Scarf made in USA of fabric made in China''

 or

``Comforter Filled, Sewn and Finished in the U.S. With Shell Made in 
China''

 or

``Made in [Foreign Country]/fabric made in USA''

 or

``Knit in USA, assembled in [Foreign Country]''.

    (ii) When the U.S. Customs Service requires an origin label on the 
unfinished product, the manufacturing processes as required in paragraph 
(a)(4)(i) of this section or the name of the foreign country required by 
Customs, for example:

``Made in (foreign country)''

    (b) For the purpose of determining whether a product should be 
marked under paragraphs (a) (2), (3), or (4) of this section, a 
manufacturer needs to consider the origin of only those materials that 
are covered under the Act and that are one step removed from that 
manufacturing process. For example, a yarn manufacturer must identify 
fiber if it is imported, a cloth manufacturer must identify imported 
yarn and a household product manufacturer must identify imported cloth 
or imported yarn for household products made directly from yarn, or 
imported fiber used as filling for warmth.
    (c) The term country means the political entity known as a nation. 
Except for the United States, colonies, possessions or protectorates 
outside the boundaries of the mother country shall be considered 
separate countries, and the name thereof shall be deemed acceptable in 
designating the country where the wool product was processed or 
manufactured unless the Commission shall otherwise direct.
    (d) The country where the imported wool product was principally made 
shall be considered to be the country where such wool product was 
processed or manufactured. Further work or material added to the wool 
product in another country must effect a basic change in form in order 
to render such other country the place where such wool product was 
processed or manufactured.
    (e) The English name of the country where the imported wool product 
was processed or manufactured shall be used. The adjectival form of the 
name of the country will be accepted as the name of the country where 
the wool product was processed or manufactured, provided the adjectival 
form of the name does not appear with such other words so as to refer to 
a kind of species of product. Variant spellings which clearly indicate 
the English name of the country, such as Brasil for Brazil and Italie 
for Italy, are acceptable. Abbreviations which un mis taken ly indicate 
the name of a country, such as Gt. Britain for Great Britain, are 
acceptable.
    (f) Nothing in this Rule shall be construed as limiting in any way 
the information required to be disclosed on labels under the provisions 
of any Tariff Act of the United States or regulations prescribed by the 
Secretary of the Treasury.

[50 FR 15106, Apr. 17, 1985. Redesignated and amended at 63 FR 7517, 
Feb. 13, 1998; 65 FR 75156, Dec. 1, 2000]



Sec. 300.25a  Country of origin in mail order advertising.

    When a wool product is advertised in any mail order catalog or mail 
order promotional material, the description of such product shall 
contain a clear

[[Page 201]]

and conspicuous statement that the product was either made in U.S.A., 
imported, or both. Other words or phrases with the same meaning may be 
used. The statement of origin required by this section shall not be 
inconsistent with the origin labeling of the product being advertised.

[50 FR 15106, Apr. 17, 1985. Redesignated at 63 FR 7517, Feb. 13, 1998]



Sec. 300.26  Pile fabrics and products composed thereof.

    The fiber content of pile fabrics or products made thereof may be 
stated in the label or mark of identification in such segregated form as 
will show the fiber content of the face or pile and of the back or base, 
with the percentages of the respective fibers as they exist in the face 
or pile and in the back or base: Provided, That in such disclosure the 
respective percentages of the face and the back be given in such manner 
as will show the ratio between the face and the back. Examples of the 
form of marking pile fabrics as to fiber content provided for in this 
section are as follows:

100% Wool Pile
100% Cotton Back
(Back constitutes 60% of fabric and pile 40%)
Pile--60% Recycled Wool, 40% Wool
Back--70% Cotton, 30% Rayon
(Pile constitutes 60% of fabric and back 40%).

[6 FR 3426, July 15, 1941, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.27  Wool products containing superimposed or added fibers.

    Where a wool product is made wholly of one fiber or a blend of 
fibers with the exception of an additional fiber in minor proportion 
superimposed or added in certain separate and distinct areas or sections 
for reinforcing or other useful purposes, the product may be designated 
according to the fiber content of the principal fiber or blend of 
fibers, with an excepting naming the superimposed or added fiber, giving 
the percentage thereof in relation to the total fiber weight of the 
principal fiber or blend of fibers, and indicating the area or section 
which contains the superimposed or added fiber. An example of this type 
of fiber content disclosure, as applied to products having reinforcing 
fibers added to a particular area or section, is as follows:

55% Recycled Wool
45% Rayon
Except 5% Nylon added to toe and heel

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.28  Undetermined quantities of reclaimed fibers.

    (a) Where a wool product is composed in part of various man-made 
fibers recovered from textile products containing underdetermined 
qualities of such fibers, the percentage content of the respective 
fibers recovered from such products may be disclosed on the required 
stamp, tag, or label, in aggregate form as ``man-made fibers'' followed 
by the naming of such fibers in the order of their predominance by 
weight, as for example:

60% Wool
40% Man-made fibers
Rayon
Acetate
Nylon

    (b) Where a wool product is composed in part of wool, or recycled 
wool and in part of unknown and, for practical purposes, undeterminable 
non-woolen fibers reclaimed from any spun, woven, knitted, felted, 
braided, bonded or otherwise manufactured or used product, the required 
fiber content disclosure may, when truthfully applicable, in lieu of the 
fiber content disclosure otherwise required by the Act and regulations, 
set forth (1) the percentages of wool or recycled wool, and (2) the 
generic names and the percentages of all other fibers whose presence is 
known or practically ascertainable and (3) the percentage of the unknown 
and undeterminable reclaimed fibers, designating such reclaimed fibers 
as ``unknown reclaimed fibers'' or ``undetermined reclaimed fibers,'' as 
for example:

75% Recycled Wool--25% Unknown Reclaimed Fibers.
35% recycled Wool--30% Acetate--15% Cotton--20% Undetermined Reclaimed 
Fibers.


In making the required fiber content disclosure any fibers referred to 
as ``unknown reclaimed fibers'' or ``undetermined reclaimed fibers'' 
shall be listed last.

[[Page 202]]

    (c) The terms unknown recycled fibers and undetermined recycled 
fibers may be used in describing the unknown and undeterminable 
reclaimed fibers referred to in paragraph (b) of this rule in lieu of 
the terms specified therein, provided, however, That the same standard 
is used in determining the applicability of the term recycled as is used 
in defining ``recycled wool'' in section 2(c) of the Act.
    (d) For purposes of this rule undetermined or unascertained amounts 
of wool or recycled wool may be classified and designated as recycled 
wool.
    (e) Nothing contained in this rule shall excuse a full and accurate 
disclosure of fiber content with correct percentages if the same is 
known or practically ascertainable, or permit a deviation from the 
requirements of section 4(a)(2)(A) of the Act with respect to products 
not labeled under the provisions of this rule or permit a higher 
classification of wool or recycled wool than that provided by Section 2 
of the Act.

[29 FR 6626, May 21, 1964, as amended at 45 FR 44262, July 1, 1980; 45 
FR 49542, July 25, 1980]



Sec. 300.29  Garments or products composed of or containing 
miscellaneous cloth scraps.

    (a) For wool products which consist of, or are made from, 
miscellaneous cloth scraps comprising manufacturing by-products and 
containing various fibers of undetermined percentages, the following 
form of disclosure as to fiber content of such wool products, where 
truthfully appliable and with appropriate percentage figure inserted, 
may be used in the stamp, tag, label, or mark of identification of such 
product:
    (1) Where the product contains chiefly cotton as well as woolen 
fibers in the minimum percentage designated for recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Cotton With 
Minimum of ----% Recycled Wool.

    (2) Where the product contains chiefly rayon as well as woolen 
fibers in the minimum percentage designated for recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Rayon With 
Minimum of ----% Recycled Wool.

    (3) Where the product is composed chiefly of a mixture of cotton and 
rayon as well as woolen fibers in the minimum percentage designated for 
recycled wool:

Made of Miscellaneous Cloth Scraps Composed Chiefly of Cotton and Rayon 
With Minimum of ----% Recycled Wool.

    (4) Where the product contains chiefly woolen fibers with the 
balance of undetermined mixtures of cotton, rayon or other non-woolen 
fibers:

Made of Miscellaneous Cloth Scraps Containing Cotton, Rayon and Other 
Non-Woolen Fibers, With Minimum of ----% Recycled Wool.

    (b) Where the cotton or rayon content or the non-woolen fiber 
content mentioned in such forms of disclosure is not known to comprise 
as much as 50% of the fiber content of the product, the word ``chiefly'' 
in the respective form of disclosure specified in this section shall be 
omitted.
    (c) The words ``Contents are'' may be used in the above-mentioned 
forms of marking in lieu of the words ``Made of'' where appropriate to 
the nature of the product.
    (d) For purposes of this rule, undetermined or unascertained amounts 
of wool or recycled wool which may be contained in the product may be 
classified and designated as recycled wool.

[6 FR 3426, July 15, 1941, as amended at 45 FR 44262, July 1, 1980]



Sec. 300.30  Deceptive labeling in general.

    Products subject to the act shall not bear, nor have used in 
connection therewith, any stamp, tag, label, mark or representation 
which is false, misleading or deceptive in any respect.

                         Manufacturers' Records



Sec. 300.31  Maintenance of records.

    (a) Pursuant to the provisions of section 6 of the Act, every 
manufacturer of a wool product subject to the Act, irrespective of 
whether any guaranty has been given or received, shall maintain records 
showing the information required by the Act and Regulations with respect 
to all such wool products made

[[Page 203]]

by such manufacturer. Such records shall show:
    (1) The fiber content of the product specified in section 4(a)(2)(A) 
of the Act.
    (2) The maximum percentage of the total weight of the wool product 
of any non-fibrous loading, filling or adulterating matter as prescribed 
by section 4(a)(2)(B) of the Act.
    (3) The name, or registered identification number issued by the 
Commission, of the manufacturer of the wool product or the name or 
registered identification number of one or more persons subject to 
section 3 of the Act with respect to such wool product.
    (4) The name of the country where the wool product was processed or 
manufactured as prescribed by sections 300.25a and/or .25b.
    (b) Any person substituting labels shall keep such records as will 
show the information on the label removed and the name or names of the 
person or persons from whom the wool product was received.
    (c) The purpose of these records is to permit a determination that 
the requirements of the Act and Regulations have been met and to 
establish a traceable line of continuity from raw material through 
processing to finished product. The records shall be preserved for at 
least three years.

[53 FR 31314, Aug. 18, 1988]

                               Guaranties



Sec. 300.32  Form of separate guaranty.

    (a) The following are suggested forms of separate guaranties under 
section 9 of the Act which may be used by a guarantor residing in the 
United States on or as part of an invoice or other paper relating to the 
marketing or handling of any wool products listed and designated therein 
and showing the date of such invoice or other paper and the signature 
and address of the guarantor:
    (1) General form.

    We guarantee that the wool products specified herein are not 
misbranded under the provisions of the Wool Products Labeling Act and 
rules and regulations thereunder.

    (2) Guaranty based on guaranty.

    Based upon a guaranty received, we guarantee that the wool products 
specified herein are not misbranded under the provisions of the Wool 
Products Labeling Act and rules and regulations thereunder.

    Note: The printed name and address on the invoice or other paper 
will suffice to meet the signature and address requirements.

    (b) The mere disclosure of required information including the fiber 
content of wool products on a label or on an invoice or other paper 
relating to its marketing or handling shall not be considered a form of 
separate guaranty.

[29 FR 6627, May 21, 1964]



Sec. 300.33  Continuing guaranty filed with Federal Trade Commission.

    (a)(1) Under section 9 of the Act any person residing in the United 
States and marketing or handling wool products may file a continuing 
guaranty with the Federal Trade Commission.
    (2) When filed with the Commission a continuing guaranty shall be 
fully executed in duplicate. Forms for use in preparing continuing 
guaranties will be supplied by the Commission upon request.
    (3) Continuing guaranties filed with the Commission shall continue 
in effect until revoked. The guarantor shall promptly report any change 
in business status to the Commission.
    (b) The prescribed form for a continuing guaranty is found in Sec. 
303.38(b) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580.
    (c) Any person who has a continuing guaranty on file with the 
Commission may, during the effective dates of the guaranty, give notice 
of such fact by setting forth on the invoice or other paper covering the 
marketing or handling of the product guaranteed the following:

    Continuing Guaranty under the Wool Products Labeling Act filed with 
the Federal Trade Commission.

    (d) Any person who falsely represents that he has a continuing 
guaranty on file with the Federal Trade Commission shall be deemed to 
have furnished

[[Page 204]]

a false guaranty under section 9(b) of the Act.

[29 FR 6627, May 21, 1964, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 28, 1998]



Sec. 300.34  Reference to existing guaranty on labels not permitted.

    No representation or suggestion that a wool product is guaranteed 
under the act by the Government, or any branch thereof shall be made on 
or in the stamp, tag, label, or other mark of identification, applied or 
affixed to wool products.

                                 General



Sec. 300.35  Hearings under section 4(d) of the act.

    Hearings under section 4(d) of the act will be held when deemed by 
the Commission to be in the public interest. Interested persons may file 
applications for such hearings. Such applications shall be filed in 
quadruplicate and shall contain a detailed technical description of the 
class or classes of articles or products regarding which applicant 
requests a determination and announcement by the Commission concerning 
express or implied representations of fiber content of articles or 
concerning insignificant or inconsequential textile content of products.

(Sec. 4(d), 54 Stat. 1129; 15 U.S.C. 68b(d))



PART 301_RULES AND REGULATIONS UNDER FUR PRODUCTS LABELING ACT--Table 
of Contents




                               Name Guide

Sec.
301.0 Fur products name guide.

                               Regulations

301.1 Terms defined.
301.2 General requirements.
301.3 English language requirements.
301.4 Abbreviations or ditto marks prohibited.
301.5 Use of Fur Products Name Guide.
301.6 Animals not listed in Fur Products Name Guide.
301.7 Describing furs by certain breed names prohibited.
301.8 Use of terms ``Persian Lamb,'' ``Broadtail Lamb,'' and ``Persian-
          broadtail Lamb'' permitted.
301.9 Use of terms ``Mouton Lamb'' and ``Shearling Lamb'' permitted.
301.10 Use of term ``Broadtail-processed Lamb'' permitted.
301.11 Fictitious or non-existing animal designations prohibited.
301.12 Country of origin of imported furs.
301.13 Fur products having furs with different countries of origin.
301.14 Country of origin of used furs.
301.15 Designation of section producing domestic furs permitted.
301.16 Disclosure of origin of certain furs raised or taken in United 
          States.
301.17 Misrepresentation of origin of furs.
301.18 Passing off domestic furs as imported furs prohibited.
301.19 Pointing, dyeing, bleaching or otherwise artificially coloring.
301.20 Fur products composed of pieces.
301.21 Disclosure of used furs.
301.22 Disclosure of damaged furs.
301.23 Second-hand fur products.
301.24 Repairing, restyling and remodeling fur products for consumer.
301.25 Name required to appear on labels and invoices.
301.26 Registered identification numbers.
301.27 Label and method of affixing.
301.28 Labels to be avoided.
301.29 Requirements in respect to disclosure on label.
301.30 Arrangement of required information on label.
301.31 Labeling of fur products consisting of two or more units.
301.32 Fur product containing material other than fur.
301.33 Labeling of samples.
301.34 Misbranded or falsely invoiced fur products.
301.35 Substitution of labels.
301.36 Sectional fur products.
301.37 Manner of invoicing furs and fur products.
301.38 Advertising of furs and fur products.
301.39 Exempted fur products.
301.40 Item number or mark to be assigned to each fur product.
301.41 Maintenance of records.
301.42 Deception as to nature of business.
301.43 Use of deceptive trade or corporate names, trademarks or graphic 
          representations prohibited.
301.44 Misrepresentation of prices.
301.45 Representations as to construction of fur products.
301.46 Reference to guaranty by Government prohibited.
301.47 Form of separate guaranty.
301.48 Continuing guaranty filed with Federal Trade Commission.
301.48a Guaranties not received in good faith.
301.49 Deception in general.

    Authority: 15 U.S.C. 69 et seq.

[[Page 205]]

                               Name Guide



Sec. 301.0  Fur products name guide.

                                                   Name Guide
----------------------------------------------------------------------------------------------------------------
               Name                         Order                  Family                  Genus-species
----------------------------------------------------------------------------------------------------------------
Alpaca............................  Ungulata.............  Camelidae............  Lama pacos.
Antelope..........................  ......do.............  Bovidae..............  Hippotragus niger and Antilope
                                                                                   cervicapra.
Badger............................  Carnivora............  Mustelidae...........  Taxida sp. and Meles sp.
Bassarisk.........................  ......do.............  Procyonidae..........  Bassariscus astutus.
Bear..............................  ......do.............  Ursidae..............  Ursus sp.
Bear, Polar.......................  ......do.............  ......do.............  Thalarctos sp.
Beaver............................  Rodentia.............  Castoridae...........  Castor canadensis.
Burunduk..........................  ......do.............  Sciuridae............  Eutamias asiaticus.
Calf..............................  Ungulata.............  Bovidae..............  Bos taurus.
Cat, Caracal......................  Carnivora............  Felidae..............  Caracal caracal.
Cat, Domestic.....................  ......do.............  ......do.............  Felis catus.
Cat, Lynx.........................  ......do.............  ......do.............  Lynx refus.
Cat, Manul........................  ......do.............  ......do.............  Felis manul.
Cat, Margay.......................  ......do.............  ......do.............  Felis wiedii.
Cat, Spotted......................  ......do.............  ......do.............  Felis sp. (South America).
Cat, Wild.........................  ......do.............  ......do.............  Felis catus and Felis lybica.
Cheetah...........................  ......do.............  ......do.............  Acinonyx jubatus.
Chinchilla........................  Rodentia.............  Chinchillidae........  Chinchilla chinchilla.
Chipmunk..........................  ......do.............  Sciuridae............  Eutamias sp.
Civet.............................  Carnivora............  Viverridae...........  Viverra sp., Viverricula sp.,
                                                                                   Paradoxurus sp., Paguma sp.,
                                                                                   and Herpestes sp.
Desman............................  Insectivora..........  Talpidae.............  Desmana moschata and Galemys
                                                                                   pyrenaicus.
Dog...............................  Carnivora............  Canidae..............  Canis familiaris.
Ermine............................  ......do.............  Mustelidae...........  Mustela erminea.
Fisher............................  ......do.............  ......do.............  Martes pennanti.
Fitch.............................  ......do.............  ......do.............  Mustela putorius.
Fox...............................  ......do.............  Canidae..............  Vulpes fulva, Vulpes, vulpes,
                                                                                   and Vulpes macrotis.
Fox, Blue.........................  ......do.............  ......do.............  Alopex sp.
Fox, Grey.........................  ......do.............  ......do.............  Urocyon cinereoargenteus and
                                                                                   Urocyon littoralis.
Fox, Kit..........................  ......do.............  ......do.............  Vulpes velox.
Fox, White........................  Carnivora............  Canidae..............  Alpoex sp.
Genet.............................  ......do.............  Viverridae...........  Genetta genetta.
Goat..............................  Ungulata.............  Bovidae..............  Cpara prisca.
Guanaco, or its young, the          ......do.............  Camelidae............  Lama guanicoe.
 Guanaquito..
Hamster...........................  Rodentia.............  Cricetidae...........  Cricetus cricetus.
Hare..............................  ......do.............  Leporidae............  Lepus sp. and Lepus europaeus
                                                                                   occidentalis.
Jackal............................  Carnivora............  Canidae..............  Canis aureus and Canis
                                                                                   adustus.
Jackal, Cape......................  ......do.............  ......do.............  Canis mesomelas.
Jaguar............................  ......do.............  Felidae..............  Felis onca.
Jaguarondi........................  ......do.............  ......do.............  Felis yagouaroundi.
Kangaroo..........................  Marsupialia..........  Macropodidae.........  Macropus sp.
Kangaroo-rat......................  ......do.............  ......do.............  Bettongia sp.
Kid...............................  Ungulata.............  Bovidae..............  Capra prisca.
Kinkajou..........................  Carnivora............  Procyonidae..........  Potos flavus.
Koala.............................  Marsupialia..........  Phasocolarctidae.....  Phascolarctos cinereus.
Kolinsky..........................  Carnivora............  Mustelidae...........  Mustela sibirica.
Lamb..............................  Ungulata.............  Bovidae..............  Ovis aries.
Leopard...........................  Carnivora............  Felidae..............  Felis pardus.
Llama.............................  Ungulata.............  Cemelidae............  Lama glama.
Lynx..............................  Carnivora............  Felidae..............  Lynx canadensis and Lynx lynx.
Marmot............................  Rodentia.............  Scinridae............  Marmota bobak.
Marten, American..................  Carnivora............  Mustelidae...........  Martes americana and Martes
                                                                                   caurina.
Marten, Baum......................  ......do.............  ......do.............  Martes martes.
Marten, Japanese..................  ......do.............  ......do.............  Martes melampus.
Marten, Stone.....................  ......do.............  ......do.............  Martes foina.
Mink..............................  ......do.............  ......do.............  Mustela vison and Mustela
                                                                                   lutreola.
Mole..............................  Insectivora..........  Talpidae.............  Talpa sp.
Monkey............................  Primates.............  Colobidae............  Colobus polykomos.
Muskrat...........................  Rodentia.............  Muridae..............  Ondatra zibethicus.
Nutria............................  ......do.............  Capromyidae..........  Myocastor coypus.
Ocelot............................  Carnivora............  Felidae..............  Felis pardalis.
Opossum...........................  Marsupialia..........  Didelphiidae.........  Didelphis sp.
Oppossum, Australian..............  ......do.............  Phalangeridae........  Trichosurus vulpecula.
Opossum, Ring-tail................  ......do.............  ......do.............  Pseudocheirus sp.
Oppossum, South American..........  ......do.............  Didelphiidae.........  Lutreolina crassicaudata.

[[Page 206]]

 
Opossum, Water....................  ......do.............  ......do.............  Chironectes minimus.
Otter.............................  Carnivora............  Mustelidae...........  Lutra canadensis, Pteronura
                                                                                   brasitionsis, Lutra annectens
                                                                                   and Lutra lutra.
Otter, Sea........................  ......do.............  ......do.............  Enhydra lutris.
Pahmi.............................  ......do.............  ......do.............  Helictis moschata and Helictis
                                                                                   personata.
Panda.............................  ......do.............  Procyonidae..........  Ailurus fulgens.
Peschanik.........................  Rodentia.............  Sciuridae............  Citellus fulvus.
Pony..............................  Ungulata.............  Equidae..............  Equus caballus.
Rabbit............................  Rodentia.............  Leporidae............  Oryctolagus cuniculus.
Raccoon...........................  Carnivora............  Procyonidae..........  Procyon lotor and Procyon
                                                                                   cancrivorus.
Raccoon, Asiatic..................  ......do.............  Canidae..............  Nyctereutes procyonoidos.
Raccoon, Mexican..................  ......do.............  ......do.............  Nasua sp.
Reindeer..........................  Ungulata.............  Cervidae.............  Rangifer tarandus.
Sable.............................  Carnivora............  Mustelidae...........  Martes zibellina.
Sable, American...................  ......do.............  ......do.............  Martes americana and Martes
                                                                                   caurina.
Seal, Fur.........................  Pinnipedia...........  Otariidae............  Callorhinus ursinus and
                                                                                   Arctocephalus sp.
Seal, Hair........................  ......do.............  Phocidae.............  Phoca sp.
Seal, Roc.........................  ......do.............  Otariidae............  Otaria flavescens.
Sheep.............................  Ungulata.............  Bovidae..............  Ovis aries.
Skunk.............................  Carnivora............  Mustelidae...........  Mephitis mephitis, Mephitis
                                                                                   macroura, Conepatus
                                                                                   semistriatus and Conepatus
                                                                                   sp.
Skunk, Spotted....................  ......do.............  ......do.............  Spilogale sp.
Squirrel..........................  Rodentia.............  Sciuridae............  Sciurus vulgaris.
Squirrel, Flying..................  ......do.............  ......do.............  Eupetaurus cinereus, Pteromys
                                                                                   volans and Petaurista
                                                                                   leucogenys.
Susilk............................  ......do.............  ......do.............  Citellus citellus, Citellus
                                                                                   rufescens and Citellus
                                                                                   suslica.
Vicuna............................  Ungulata.............  Camelidae............  Vicugna vicugna.
Viscacha..........................  Rodentia.............  Chinchillidae........  Ligidium viscacia.
Wallaby...........................  Marsupialia..........  Macropodidae.........  Wallabia sp., Petrogale sp.,
                                                                                   and Thylogale sp.
Weasel............................  Carnivora............  Mustelidae...........  Mustela frenata.
Weasel, Chinese...................  ......do.............  ......do.............  Mustela sibirica.
Weasel, Japanese..................  ......do.............  ......do.............  Mustela itatsi (also
                                                                                   classified as Mustela
                                                                                   sibirica itatsi).
Weasel, Manchurian................  Carnivora............  Mustelidae...........  Mustela altaica and Mustela
                                                                                   rixosa.
Wolf..............................  ......do.............  Canidae..............  Canis lupus and Canis niger.
Wolverine.........................  ......do.............  Mustelidae...........  Gulo luscus and Gulo gulo.
Wombat............................  Marsupialia..........  Vombatidae...........  Vombatus sp.
Woodchuck.........................  Rodentia.............  Sciuridae............  Marmota monax.
----------------------------------------------------------------------------------------------------------------


(Secs. 7, 8, 65 Stat. 179; 15 U.S.C. 69e, 69f)

[17 FR 1205, Feb. 3, 1952, as amended at 26 FR 10446, Nov. 4, 1961; 32 
FR 6023, Apr. 15, 1967]

                               Regulations

    Source: 17 FR 6075, July 8, 1952, unless otherwise noted.



Sec. 301.1  Terms defined.

    (a) As used in this part, unless the context otherwise specifically 
requires:
    (1) The term act means the Fur Products Labeling Act (approved Aug. 
8, 1951, Pub. L. 110, 82d Cong., 1st Sess.; 15 U.S.C.A. sec. 69; 65 
Stat. 179).
    (2) The terms rule, rules, regulations, and rules and regulations, 
mean the rules and regulations prescribed by the Commission pursuant to 
section 8 (b) of the act.
    (3) The definitions of terms contained in section 2 of the act shall 
be applicable also to such terms when used in rules promulgated under 
the act.
    (4) The terms Fur Products Name Guide and Name Guide mean the 
register of names of hair fleece and fur bearing animals issued by the 
Commission on February 8, 1952, pursuant to the provisions of section 7 
(a) of the act.
    (5) The terms required information and information required mean the 
information required to be disclosed on labels, invoices and in 
advertising under the act and rules and regulations, and such further 
information as may be permitted by the regulations, when and if used.
    (6) The term cat fur means the pelt or skin of any animal of the 
species Felis catus.

[[Page 207]]

    (7) The term dog fur means the pelt or skin of any animal of the 
species Canis familiaris.
    (8) The term dog or cat fur product means any item of merchandise 
which consists, or is composed in whole or in part, of any dog fur, cat 
fur, or both.
    (b) The term wearing apparel as used in the definition of a fur 
product in section 2(d) of the Act means (1) Any articles of clothing or 
covering for any part of the body; and (2) shall include any assembled 
furs, used furs, or waste furs, in attached form, including mats, plates 
or garment shells or furs flat off the board, and furs which have been 
dyed, tip-dyed, bleached or artificially colored, intended for use as or 
in wearing apparel: Provided, however, That the provisions of section 
4(2) of the Act shall not be applicable to those fur products set out in 
paragraph (b)(2) of this section.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 61 
FR 67709, Dec. 24, 1996; 65 FR 82270, Dec. 28, 2000]



Sec. 301.2  General requirements.

    (a) Each and every fur product, except those exempted under Sec. 
301.39 of this part, shall be labeled and invoiced in conformity with 
the requirements of the act and rules and regulations.
    (b) Each and every fur shall be invoiced in conformity with the 
requirements of the act and rules and regulations.
    (c) Any advertising of fur products or furs shall be in conformity 
with the requirements of the act and rules and regulations.



Sec. 301.3  English language requirements.

    All information required under the act and rules and regulations to 
appear on labels, invoices, and in advertising, shall be set out in the 
English language. If labels, invoices or advertising matter contain any 
of the required information in a language other than English, all of the 
required information shall appear also in the English language. The 
provisions of this section shall not apply to advertisements in foreign 
language newspapers or periodicals, but such advertising shall in all 
other respects comply with the act and regulations.



Sec. 301.4  Abbreviations or ditto marks prohibited.

    In disclosing required information in labeling and advertising, 
words or terms shall not be abbreviated or designated by the use of 
ditto marks but shall be spelled out fully, and in invoicing the 
required information shall not be abbreviated but shall be spelled out 
fully.



Sec. 301.5  Use of Fur Products Name Guide.

    (a) The Fur Products Name Guide (Sec. 301.0 of this part) is set up 
in four columns under the headings of Name, Order, Family and Genus-
Species. The applicable animal name appearing in the column headed 
``Name'' shall be used in the required information in labeling, 
invoicing and advertising of fur products and furs. The scientific names 
appearing under the columns headed Order, Family, and Genus-Species are 
furnished for animal identification purposes and shall not be used.
    (b) Where the name of the animal appearing in the Name Guide 
consists of two separate words the second word shall precede the first 
in designating the name of the animal in the required information; as 
for example: ``Fox, Black'' shall be disclosed as ``Black Fox.''



Sec. 301.6  Animals not listed in Fur Products Name Guide.

    (a) All furs are subject to the act and regulations regardless of 
whether the name of the animal producing the fur appears in the Fur 
Products Name Guide.
    (b) Where fur is obtained from an animal not listed in the Fur 
Products Name Guide it shall be designated in the required information 
by the true English name of the animal or in the absence of a true 
English name, by the name which properly identifies such animal in the 
United States.



Sec. 301.7  Describing furs by certain breed names prohibited.

    If the fur of an animal is described in any manner by its breed, 
species, strain or coloring, irrespective of former usage, such 
descriptive matter shall not contain the name of another animal either 
in the adjective form or

[[Page 208]]

otherwise nor shall such description (subject to any exception contained 
in this part or animal names appearing in the Fur Products Name Guide) 
contain a name in an adjective form or otherwise which connotes a false 
geographic origin of the animal. For example, such designations as 
``Sable Mink,'' ``Chinchilla Rabbit,'' and ``Aleutian Mink'' shall not 
be used.



Sec. 301.8  Use of terms ``Persian Lamb,'' ``Broadtail Lamb,'' and 
``Persian-broadtail Lamb'' permitted.

    (a) The term Persian Lamb may be used to describe the skin of the 
young lamb of the Karakul breed of sheep or top-cross breed of such 
sheep, having hair formed in knuckled curls.
    (b) The term Broadtail Lamb may be used to describe the skin of the 
prematurely born, stillborn, or very young lamb of the Karakul breed of 
sheep or top-cross breed of such sheep, having flat light-weight fur 
with a moire pattern.
    (c) The term Persian-broadtail Lamb may be used to describe the skin 
of the very young lamb of the Karakul breed of sheep or top-cross breed 
of such sheep, having hair formed in flattened knuckled curls with a 
moire pattern.
    (d) The terms ``Persian Lamb'', ``Broadtail Lamb'', or ``Persian-
broadtail Lamb'' shall not be used to describe: (1) The so-called 
Krimmer, Bessarabian, Rumanian, Shiraz, Salzfelle, Metis, Dubar, Meshed, 
Caracul, Iranian, Iraqi, Chinese, Mongolian, Chekiang, or Indian lamb 
skins, unless such lamb skins conform with the requirements set out in 
paragraph (a), (b), or (c) of this section respectively; or (2) any 
other lamb skins having hair in a wavy or open curl pattern.



Sec. 301.9  Use of terms ``Mouton Lamb'' and ``Shearling Lamb'' 
permitted.

    (a) The term Mouton Lamb may be used to describe the skin of a lamb 
which has been sheared, the hair straightened, chemically treated, and 
thermally set to produce a moisture repellant finish; as for example:

Dyed Mouton Lamb

    (b) The term Shearling Lamb may be used to describe the skin of a 
lamb which has been sheared and combed.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961]



Sec. 301.10  Use of term ``Broadtail-processed Lamb'' permitted.

    The term Broadtail-processed Lamb may be used to describe the skin 
of a lamb which has been sheared, leaving a moire hair pattern on the 
pelt having the appearance of the true fur pattern of ``Broadtail 
Lamb''; as for example:

Dyed Broadtail-processed Lamb
Fur origin: Argentina



Sec. 301.11  Fictitious or non-existing animal designations prohibited.

    No trade names, coined names, nor other names or words descriptive 
of a fur as being the fur of an animal which is in fact fictitious or 
non-existent shall be used in labeling, invoicing or advertising of a 
fur or fur product.



Sec. 301.12  Country of origin of imported furs.

    (a)(1) In the case of furs imported into the United States from a 
foreign country, the country of origin of such furs shall be set forth 
as a part of the information required by the act in invoicing and 
advertising.
    (2) In the case of fur products imported into the United States from 
a foreign country, or fur products made from furs imported into the 
United States from a foreign country, the country of origin of the furs 
contained in such products shall be set forth as a part of the 
information required by the act in labeling, invoicing and advertising.
    (b) The term country means the political entity known as a nation. 
Colonies, possessions or protectorates outside the boundaries of the 
mother country shall be considered separate countries and the name 
thereof shall be deemed acceptable in designating the ``country of 
origin'' unless the Commission shall otherwise direct.
    (c) The country in which the animal producing the fur was raised, or 
if in a feral state, was taken, shall be considered the ``country of 
origin.''
    (d) When furs are taken within the territorial waters of a country, 
such

[[Page 209]]

country shall be considered the ``country of origin.'' Furs taken 
outside such territorial waters, or on the high seas, shall have as 
their country of origin the country having the nearest mainland.
    (e)(1) The English name of the country of origin shall be used. 
Abbreviations which unmistakably indicate the name of a country, such as 
``Gt. Britain'' for ``Great Britain,'' are acceptable. Abbreviations 
such as ``N.Z.'' for ``New Zealand'' are not acceptable.
    (2) The name of the country of origin, when used as a part of the 
required information in labeling shall be preceded by the term fur 
origin; as for example:

Dyed Muskrat
Fur Origin: Russia

 or

Dyed China Mink
Fur Origin: China

    (3) In addition to the required disclosure of country of origin the 
name of the country may also appear in adjective form in connection with 
the name of the animal; as for example:

Tip-dyed Canadian American Sable
Fur Origin: Canada

 or

Russian Sable
Fur Origin: Russia

    (f) Nothing in this section shall be construed as limiting in any 
way the information required to be disclosed on labels under the 
provisions of any Tariff Act of the United States or regulations 
prescribed by the Secretary of the Treasury.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 61 
FR 67709, Dec. 24, 1996]



Sec. 301.13  Fur products having furs with different countries of origin.

    When a fur product is composed of furs with different countries of 
origin the names of such countries shall be set forth in the required 
information in the order of predominance by surface areas of the furs in 
the fur product.



Sec. 301.14  Country of origin of used furs.

    When the country of origin of used furs is unknown, and no 
representations are made directly or by implication with respect 
thereto, this fact shall be set out as a part of the required 
information in lieu of the country of origin as ``Fur origin: Unknown.''



Sec. 301.15  Designation of section producing domestic furs permitted.

    In the case of furs produced in the United States the name of the 
section or area producing the furs used in the fur product may be set 
out in connection with the name of the animal; as for example:

Dyed Fur Seal
Fur origin: Alaska

 or

Dyed Muskrat
Fur origin: Minnesota



Sec. 301.16  Disclosure of origin of certain furs raised or taken in 
United States.

    If the name of any animal set out in the Fur Products Name Guide or 
term permitted by the regulations to be used in connection therewith 
connotes foreign origin and such animal is raised or taken in the United 
States, furs obtained therefrom shall be described in disclosing the 
required information as having the United States as the country of 
origin; as for example:

Dyed Persian Lamb
Fur origin: United States

 or

Mexican Raccoon
Fur origin: United States



Sec. 301.17  Misrepresentation of origin of furs.

    No misleading nor deceptive statements as to the geographical or 
zoological origin of the animal producing a fur shall be used directly 
or indirectly in labeling, invoicing or advertising furs or fur 
products.



Sec. 301.18  Passing off domestic furs as imported furs prohibited.

    No domestic furs nor fur products shall be labeled, invoiced or 
advertised in such a manner as to represent directly or by implication 
that they have been imported.



Sec. 301.19  Pointing, dyeing, bleaching or otherwise artificially 
coloring.

    (a) Where a fur or fur product is pointed or contains or is composed 
of bleached, dyed or otherwise artificially

[[Page 210]]

colored fur, such facts shall be disclosed as a part of the required 
information in labeling, invoicing and advertising.
    (b) The term pointing means the process of inserting separate hairs 
into furs or fur products for the purpose of adding guard hairs, either 
to repair damaged areas or to simulate other furs.
    (c) The term bleaching means the process for producing a lighter 
shade of a fur, or removing off-color spots and stains by a bleaching 
agent.
    (d) The term dyeing (which includes the processes known in the trade 
of tipping the hair or fur, feathering, and beautifying) means the 
process of applying dyestuffs to the hair or fur, either by immersion in 
a dye bath or by application of the dye by brush, feather, spray, or 
otherwise, for the purpose of changing the color of the fur or hair, or 
to accentuate its natural color. When dyestuff is applied by immersion 
in a dye bath or by application of the dye by brush, feather, or spray, 
it may respectively be described as ``vat dyed'', ``brush dyed'', 
``feather dyed'', or ``spray dyed'', as the case may be. When dyestuff 
is applied only to the ends of the hair or fur, by feather or otherwise, 
it may also be described as ``tip-dyed''. The application of dyestuff to 
the leather or the skin (known in the trade as ``tipping'', as 
distinguished from tip-dyeing the hair or fur as above described) and 
which does not affect a change of, nor accentuate the natural color of 
the hair or fur, shall not be considered as ``dyeing''. When fluorescent 
dye is applied to a fur or fur product it may be described as 
``brightener added''.
    (e) The term artificial coloring means any change or improvement in 
color of a fur or fur product in any manner other than by pointing, 
bleaching, dyeing, or tip-dyeing, and shall be described in labeling, 
invoicing and advertising as ``color altered'' or ``color added''.
    (f) The term blended shall not be used as a part of the required 
information to describe the pointing, bleaching, dyeing, tip-dyeing, or 
otherwise artificially coloring of furs.
    (g) Where a fur or fur product is not pointed, bleached, dyed, tip-
dyed, or otherwise artificially colored it shall be described as 
``natural''.
    (h) Where any fur or fur product is dressed, processed or treated 
with a solution or compound containing any metal and such compound or 
solution effects any change or improvement in the color of the hair, 
fleece or fur fiber, such fur or fur product shall be described in 
labeling, invoicing and advertising as ``color altered'' or ``color 
added''.
    (i)(1) Any person dressing, processing or treating a fur pelt in 
such a manner that it is required under paragraph (e) or (h) of this 
section to be described as ``color altered'' or ``color added'' shall 
place a black stripe at least one half inch (1.27 cm) in width across 
the leather side of the skin immediately above the rump or place a stamp 
with a solid black center in the form of either a two inch (5.08 cm) 
square or a circle at least two inches (5.08 cm) in diameter on the 
leather side of the pelt and shall use black ink for all other stamps or 
markings on the leather side of the pelt.
    (2) Any person dressing, processing or treating a fur pelt which 
after processing is considered natural under paragraph (g) of this 
section shall place a white stripe at least one half inch (1.27 cm) in 
width across the leather side of the skin immediately above the rump or 
place a stamp with a solid white center in the form of either a two inch 
(5.08 cm) square or a circle at least two inches (5.08 cm) in diameter 
on the leather side of the pelt and shall use white ink for all other 
stamps or markings on the leather side of the pelt.
    (3) Any person dressing, processing or treating a fur pelt in such a 
manner that it is considered dyed under paragraph (d) of this section 
shall place a yellow stripe at least one half inch (1.27 cm) in width 
across the leather side immediately above the rump or place a stamp with 
a solid yellow center in the form of either a two inch (5.08 cm) square 
or a circle at least two inches (5.08 cm) in diameter on the leather 
side of the pelt and shall use yellow ink for all other stamps or 
markings on the leather side of the pelt.
    (4) In lieu of the marking or stamping otherwise required by 
paragraphs

[[Page 211]]

(i) (1), (2), and (3) of this section, any person dressing, processing 
or treating a fur pelt so as to be subject to the stamping or marking 
requirements of this paragraph may stamp the leather side of the pelt 
with the appropriate truthful designation ``dyed'', ``color altered'', 
``color added'', or ``natural'', as the case may be, in such manner that 
the stamp will not be obliterated or mutilated by further processing and 
will remain clearly legible until the finished fur product reaches the 
ultimate consumer.
    (5) Where, after assembling, fur garment shells, mats, plates or 
other assembled furs are processed or treated in such a manner as to 
fall within the stamping or marking provisions of this paragraph, such 
assembled furs, in lieu of the stamping or marking of each individual 
pelt or piece, may be appropriately stamped on the leather side as 
provided in this paragraph in such a manner that the stamp will remain 
on the finished fur product and clearly legible until it reaches the 
ultimate consumer and will not be mutilated or obliterated by further 
processing.
    (j) Any person who shall process a fur pelt in such a manner that 
after such processing it is no longer considered as natural shall 
clearly, conspicuously and legibly stamp on the leather side of the pelt 
and on required invoices relating thereto a lot number or other 
identifying number which relates to such records of the processor as 
will show the source and disposition of the pelts and the details of the 
processing performed. Such person shall also stamp his name or 
registered identification number on the leather side of the pelt.
    (k) Any person who possesses fur pelts of a type which are always 
considered as dyed under paragraph (d) of this section after processing 
or any person who processes fur pelts which are always natural at the 
time of sale to the ultimate consumer, which pelts for a valid reason 
cannot be marked or stamped as provided in this section, may file an 
affidavit with the Federal Trade Commission's Bureau of Consumer 
Protection setting forth such facts as will show that the pelts are 
always dyed or natural as the case may be and that the stamping of such 
pelts cannot be reasonably accomplished. If the Bureau of Consumer 
Protection is satisfied that the public interest will be protected by 
the filing of the affidavit, it may accept such affidavit and advise the 
affiant that marking of the fur pelts themselves as provided in this 
section will be unnecessary until further notice. Any person filing such 
an affidavit shall promptly notify the Commission of any change in 
circumstances with respect to its operations.
    (l) Any person subject to this section who incorrectly marks or 
fails to mark fur pelts as provided in paragraphs (i) and (j) of this 
section shall be deemed to have misbranded such products under section 
4(l) of the Act. Any person subject to this section who furnishes a 
false or misleading affidavit under paragraph (k) of this section or 
fails to give the notice required by paragraph (k) of this section shall 
be deemed to have neglected and refused to maintain the records required 
by section 8(d) of the Act.
    (1) In connection with paragraph (h) of this section, the following 
method may be used for detection of parts per million of iron and copper 
in hairs from fur pelts including hairs from mink pelts. Procedure for 
detection of parts per million of iron and copper in hairs from fur 
pelts including mink hairs.
    (2) A recommended method for preparation of samples would be: 
Carefully pluck hair samples from 10 to 15 different representative 
sites on the pelt or garment. This can best be accomplished by using a 
long nose stainless steel pliers with a tip diameter of \1/16\ inch 
(1.59 mm). The pliers should be inserted at the same angle as the guard 
hairs with the tip opened to \1/4\ inch (6.35 mm). After contact with 
the hide, the tip should be raised about \1/4\ inch (6.35 mm), closed 
tightly and pulled quickly and firmly to remove the hair.
    (3) Place an accurately weighed sample of approximately .1000 grams 
of mink hair into a beaker with 20 ml. concentrated nitric acid. 
Evaporate just to dryness on a hot plate.
    (4) If there is any organic matter still present, add 10 ml. of 
concentrated nitric acid (see paragraph 7) and again evaporate just to 
dryness on a hot plate. This step should be repeated until the nitric 
acid solution becomes

[[Page 212]]

clear to light green. Add 10 ml. of 1% hydrochloric acid to the dried 
residue in the beaker. Warm on a hot plate to insure complete solution 
of the residue.
    (5) A recommended analytical procedure would be atomic absorption 
spectrophotometry. In testing for iron, the atomic absorption instrument 
must have the capability of a 2 angstrom band pass at the 2483 A line. 
When analyzing for iron the air-acetylene flame should be as lean as 
possible.
    (6) A reagent blank should be carried through the entire procedure 
as outlined above and the final results corrected for the amounts of 
iron and copper found in the reagent blank.
    (7) If facilities are available for handling perchloric acid, a 
preferred alternate to the additional nitric acid treatment would be to 
add 2 ml. of perchloric acid and 8 ml. of nitric acid, cover the beaker 
with a watch glass and allow the solutions to become clear to light 
green before removal of the watch glass and evaporation just to dryness.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3186, Apr. 14, 1961; 34 
FR 381, Jan. 10, 1969; 36 FR 5689, Mar. 26, 1971; 41 FR 2636, Jan. 19, 
1976; 53 FR 31314, Aug. 18, 1988; 61 FR 67709, Dec. 24, 1996]



Sec. 301.20  Fur products composed of pieces.

    (a) Where fur products, or fur mats and plates, are composed in 
whole or in substantial part of paws, tails, bellies, sides, flanks, 
gills, ears, throats, heads, scrap pieces, or waste fur, such fact shall 
be disclosed as a part of the required information in labeling, 
invoicing and advertising. Where a fur product is made of the backs of 
skins such fact may be set out in labels, invoices and advertising.
    (b) Where fur products, or fur mats and plates, are composed wholly 
or substantially of two or more of the parts set out in paragraph (a) of 
this section or one or more of such parts and other fur, disclosure in 
respect thereto shall be made by naming such parts or other fur in order 
of predominance by surface area.
    (c) The terms substantial part and substantially mean ten per centum 
(10 percent) or more in surface area.
    (d) The term assembled shall not be used in lieu of the terms set 
forth in paragraph (a) of this section to describe fur products or fur 
mats and plates composed of such parts.



Sec. 301.21  Disclosure of used furs.

    (a) When fur in any form has been worn or used by an ultimate 
consumer it shall be designated ``used fur'' as a part of the required 
information in invoicing and advertising.
    (b) When fur products or fur mats and plates are composed in whole 
or in part of used fur, such fact shall be disclosed as a part of the 
required information in labeling, invoicing and advertising; as for 
example:

Leopard
Used Fur

 or

Dyed Muskrat
Contains Used Fur



Sec. 301.22  Disclosure of damaged furs.

    (a) The term damaged fur, as used in this part, means a fur, which, 
because of a known or patent defect resulting from natural causes or 
from processing, is of such a nature that its use in a fur product would 
decrease the normal life and durability of such product.
    (b) When damaged furs are used in a fur product, full disclosure of 
such fact shall be made as a part of the required information in 
labeling, invoicing, or advertising such product; as for example:

Mink
Fur origin: Canada
Contains Damaged Fur



Sec. 301.23  Second-hand fur products.

    When a fur product has been used or worn by an ultimate consumer and 
is subsequently marketed in its original, reconditioned, or rebuilt form 
with or without the addition of any furs or used furs, the requirements 
of the act and regulations in respect to labeling, invoicing and 
advertising of such product shall be applicable thereto, subject, 
however, to the provisions of Sec. 301.14 of this part as to country of 
origin requirement, and in addition, as a part of the required 
information such product shall be designated ``Second-hand'',

[[Page 213]]

``Reconditioned-Second-hand'', or ``Rebuilt-Second-hand'', as the case 
may be.



Sec. 301.24  Repairing, restyling and remodeling fur products for 
consumer.

    When fur products owned by and to be returned to the ultimate-
consumer are repaired, restyled or remodeled and used fur or fur is 
added thereto, labeling of the fur product shall not be required. 
However, the person adding such used fur or fur to the fur product, or 
who is responsible therefor, shall give to the owner an invoice 
disclosing the information required under the act and regulations 
respecting the used fur or fur added to the fur product, subject, 
however, to the provisions of Sec. 301.14 of this part as to country of 
origin requirements.



Sec. 301.25  Name required to appear on labels and invoices.

    The name required by the act to be used on labels and invoices shall 
be the full name under which the person is doing business, and no trade-
mark, trade name nor other name which does not constitute such full name 
shall be used in lieu thereof.



Sec. 301.26  Registered identification numbers.

    (a) Registered numbers for use as the required identification in 
lieu of the name on fur product labels as provided in section 4(2)(E) of 
the act will be issued by the Commission to qualified persons residing 
in the United States upon receipt of an application duly executed in the 
form set out in paragraph (d) of this section.
    (b)(1) Registered identification numbers shall be used only by the 
person or concern to whom they are issued, and such numbers are not 
transferable or assignable.
    (2) Registered identification numbers shall be subject to 
cancellation if the Federal Trade Commission fails to receive prompt 
notification of any change in name, business address, or legal business 
status of a person or firm to whom a registered identification number 
has been assigned, by application duly executed in the form set out in 
paragraph (d) of this section, reflecting the current name, business 
address, and legal business status of the person or firm.
    (3) Registered identification numbers shall be subject to 
cancellation whenever any such number was procured or has been used 
improperly or contrary to the requirements of the act and regulations, 
or when otherwise deemed necessary in the public interest.
    (c) Registered identification numbers assigned under this rule may 
be used on labels required in labeling products subject to the 
provisions of the Wool Products Labeling Act and Textile Fiber Products 
Identification Act, and numbers previously assigned or to be assigned by 
the Commission under such Acts may be used as and for the required name 
in labeling under this Act. When so used by the person or firm to whom 
assigned, the use of the numbers shall be construed as identifying and 
binding the applicant as fully and in all respects as though assigned 
under the specific Act for which it is used.
    (d) The form to apply for a registered identification number or to 
update information pertaining to an existing number is found in Sec. 
303.20(d) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580, or on the Internet at 
http://www.ftc.gov).

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961; 48 
FR 12516, Mar. 25, 1983; 63 FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 
28, 1998]



Sec. 301.27  Label and method of affixing.

    At all times during the marketing of a fur product the required 
label shall have a minimum dimension of one and three-fourths (1\3/4\) 
inches by two and three-fourths (2\3/4\) inches (4.5 cm x 7 cm). Such 
label shall be of a material of sufficient durability and shall be 
conspicuously affixed to the product in a secure manner and with 
sufficient permanency to remain thereon throughout the sale, resale, 
distribution and handling incident thereto, and shall remain on or be 
firmly affixed to the respective product when sold and delivered to the 
purchaser and purchaser-consumer thereof.

[61 FR 67710, Dec. 24, 1996]

[[Page 214]]



Sec. 301.28  Labels to be avoided.

    Labels which are insecurely or inconspicuously attached, or which in 
the course of offering the fur product for sale, selling, transporting, 
marketing, or handling incident thereto, are likely to become detached, 
indistinct, obliterated, illegible, mutilated, inaccessible or 
inconspicuous shall not be used.



Sec. 301.29  Requirements in respect to disclosure on label.

    (a) The required information shall be set out on the label in a 
legible manner and in not smaller than pica or twelve (12) point type, 
and all parts of the required information shall be set out in letters of 
equal size and conspicuousness. All of the required information with 
respect to the fur product shall be set out on one side of the label and 
no other information shall appear on such side except the lot or style 
designation and size. The lot or style designation may include non-
deceptive terms indicating the type of garment, color of fur, and brand 
name for fur. The other side of the label may be used to set out any 
nonrequired information which is true and non-deceptive and which is not 
prohibited by the Act and regulations, but in all cases the animal name 
used shall be that set out in the Name Guide.
    (b) The required information may be set out in hand printing 
provided it conforms to the requirements of paragraph (a) of this 
section, and is set out in indelible ink in a clear, distinct, legible 
and conspicuous manner. Handwriting shall not be used in setting out any 
of the required information on the label.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961]



Sec. 301.30  Arrangement of required information on label.

    (a) The applicable parts of the information required with respect to 
the fur to appear on labels affixed to fur products shall be set out in 
the following sequence:
    (1) That the fur product contains or is composed of natural, 
pointed, bleached, dyed, tip-dyed or otherwise artificially colored fur, 
when such is the fact;
    (2) That the fur product contains fur which has been sheared, 
plucked, or letout, when such is the fact;
    (3) That the fur contained in the fur product originated in a 
particular country (when so used the name of the country should be 
stated in the adjective form), when such is the fact;
    (4) The name or names (as set forth in the Fur Products Name Guide) 
of the animal or animals that produced the fur;
    (5) That the fur product is composed in whole of backs or in whole 
or in substantial part of paws, tails, bellies, sides flanks, gills, 
ears, throats, heads, scrap pieces, or waste fur, when such is the fact;
    (6) The name of the country of origin of any imported furs used in 
the fur product;
    (7) Any other information required or permitted by the Act and 
regulations with respect to the fur.

    Note: The information set out in paragraphs (a) (2) and (3) of this 
section and the term backs set out in paragraph (a)(5) of this section 
are not mandatory, but when and if used, shall be set out in the 
sequence noted.

    (b) That part of the required information with respect to the name 
or registered identification number of the manufacturer or dealer may 
precede or follow the required information set out in paragraph (a) of 
this section.

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961]



Sec. 301.31  Labeling of fur products consisting of two or more units.

    (a) The label shall be attached to and appear upon each garment or 
separate article of wearing apparel subject to the act irrespective of 
whether two or more garments or articles may be sold or marketed 
together or in combination with each other.
    (b) In the case of fur products manufactured for use in pairs or 
groups, only one label will be required if all units in the pair or 
group are of the same fur and have the same country of origin, and are 
firmly attached to each other when marketed and delivered in the 
channels of trade and to the purchaser-consumer and the information set 
out on the label is clearly applicable to

[[Page 215]]

each unit in the pair or group and supplies the information required 
under the act and rules and regulations.



Sec. 301.32  Fur product containing material other than fur.

    (a) Where a fur product contains a material other than fur the 
content of which is required to be disclosed on labels under other 
statutes administered by the Commission, such information may be set out 
on the same side of the label and in immediate conjunction with the 
information required under this Act; as for example:

100% Wool
Interlining--100% Recycled Wool
Trim--Dyed Muskrat
Fur Origin: Canada

 or

Body: 100% Cotton
Lining: 100% Nylon
Collar: Dyed Mouton Lamb
Fur Origin: Argentina

    (b) Information which may be desirable or necessary to fully inform 
the purchaser of other material content of a fur product may be set out 
on the same side of the label as used for disclosing the information 
required under the Act and rules and regulations; as for example:

Body--Leather
Trim--Dyed Mink

[26 FR 3187, Apr. 14, 1961, as amended at 45 FR 44263, July 1, 1980]



Sec. 301.33  Labeling of samples.

    Where samples of furs or fur products subject to the act are used to 
promote or effect sales of fur products, said samples, as well as the 
fur products purchased therefrom, shall be labeled to show the 
information required under the act and regulations.



Sec. 301.34  Misbranded or falsely invoiced fur products.

    (a) If a person subject to section 3 of the Act with respect to a 
fur product finds that a fur product is misbranded he shall correct the 
label or replace same with a substitute containing the required 
information.
    (b) If a person subject to section 3 of the Act with respect to a 
fur or fur product finds that the invoice issued to him is false or 
deceptive, he shall, in connection with any invoice issued by him in 
relation to such fur or fur product correctly set forth all of the 
information required by the Act and regulations in relation to such fur 
or fur product.

[26 FR 3187, Apr. 14, 1961]



Sec. 301.35  Substitution of labels.

    (a) Persons authorized under the provisions of section 3(e) of the 
act to substitute labels affixed to fur products may do so, provided the 
substitute label is complete and carries all the information required 
under the act and rules and regulations in the same form and manner as 
required in respect to the original label. The substitute label need 
not, however, show the name or registered number appearing on the 
original label if the name or registered number of the person who 
affixes the substitute appears thereon.
    (b) The original label may be used as a substitute label provided 
the name or registered number of the person making the substitution, 
together with the item number or mark assigned by such person to said 
fur product for record purposes is inserted thereon without interfering 
with or obscuring in any manner other required information. In 
connection with such substitution the name or registered number as well 
as any record numbers appearing on the original label may be removed.
    (c) Persons substituting labels under the provision of this section 
shall maintain the records required under Sec. 301.41 of this part.



Sec. 301.36  Sectional fur products.

    (a) Where a fur product is composed of two or more sections 
containing different animal furs the required information with respect 
to each section shall be separately set forth in labeling, invoicing or 
advertising; as for example:

Dyed Rabbit
Fur origin: France
Trimming: Dyed Mouton-processed Lamb
Fur origin: Argentina

 or

Body: Dyed Kolinsky
Fur origin: Russia
Tail: Dyed Mink
Fur origin: Canada


[[Page 216]]


    (b) The provisions of this section shall not be interpreted so as to 
require the disclosure of very small amounts of different animal furs 
added to complete a fur product or skin such as the ears, snoot, or 
under part of the jaw.



Sec. 301.37  Manner of invoicing furs and fur products.

    (a) In the invoicing of furs and fur products, all of the required 
information shall be set out in a clear, legible, distinct and 
conspicuous manner. The invoice shall be issued at the time of the sale 
or other transaction involving furs or fur products, but the required 
information need not be repeated in subsequent periodic statements of 
account respecting the same furs or fur products.
    (b) Non-required information or representations appearing in the 
invoicing of furs and fur products shall in no way be false or deceptive 
nor include any names, terms or representations prohibited by the act 
and regulations. Nor shall such information or representations be set 
forth or used in such manner as to interfere with the required 
information.



Sec. 301.38  Advertising of furs and fur products.

    (a)(1) In advertising furs or fur products, all parts of the 
required information shall be stated in close proximity with each other 
and, if printed, in legible and conspicuous type of equal size.
    (2) Non-required information or representations appearing in the 
advertising of furs and fur products shall in no way be false or 
deceptive nor include any names, terms or representations prohibited by 
the act and regulations. Nor shall such information or representations 
be set forth or used in such manner as to interfere with the required 
information.
    (b)(1) In general advertising of a group of fur products composed in 
whole or in part of imported furs having various countries of origin, 
the disclosure of such countries of origin may, by reference, be made 
through the use of the following statement in the advertisement in a 
clear and conspicuous manner:

Fur products labeled to show country of origin of imported furs

    (2) The provisions of this paragraph shall not be applicable in the 
case of catalogue, mail order, or other types of advertising which 
solicit the purchase of fur products in such a manner that the purchaser 
or prospective purchaser would not have the opportunity of viewing the 
product and attached label prior to delivery thereof.
    (c) In advertising of an institutional type referring only to the 
general nature or kind of business conducted or to the general 
classification of the types or kinds of furs or fur products 
manufactured or handled, and which advertising is not intended to aid, 
promote, or assist directly or indirectly in the sale or offering for 
sale of any specific fur products or furs, the required information need 
not be set forth: Provided, however, That if reference is made in the 
advertisement to a color of the fur which was caused by dyeing, 
bleaching or other artificial coloring, such facts shall be disclosed in 
the advertising, and provided further, that when animal names are used 
in such advertising, such names shall be those set forth in the Fur 
Products Name Guide. For example, the kind of advertising contemplated 
by this paragraph is as follows:

X Fur Company
Famous for its Black Dyed Persian Lamb Since 1900

 or

X Company
Manufacturers of Fine Muskrat Coats, Capes and Stoles



Sec. 301.39  Exempted fur products.

    (a) If the cost of any fur trim or other manufactured fur or furs 
contained in a fur product, exclusive of any costs incident to its 
incorporation therein, does not exceed one hundred fifty dollars ($150) 
to the manufacturer of the finished fur product, or if a manufacturer's 
selling price of a fur product does not exceed one hundred fifty dollars 
($150), and the provisions of paragraphs (b) and (c) of this section are 
met, the fur product shall be exempted from the requirements of the Act 
and regulations in this part; provided, however, that if the fur product 
is made of or contains any used fur, or if the fur product itself is or 
purports to be the whole skin of an animal with

[[Page 217]]

the head, ears, paws and tail, such as a choker or scarf, the fur 
product is to be labeled, invoiced and advertised in accordance with the 
requirements of the Act and regulations in this part, regardless of the 
cost of the fur used in the fur product or the manufacturer's selling 
price. The exemption provided for herein shall not be applicable:
    (1) To any dog or cat fur product;
    (2) If any false, deceptive, or misleading representations as to the 
fur contained in the fur product are made; or
    (3) If any representations as to the fur are made in labeling, 
invoicing, or advertising without disclosing:
    (i) In the case of labels, the information required to be disclosed 
under section 4(2)(A), (C), and (D) of the Act;
    (ii) In the case of advertising, the information required to be 
disclosed under section 5(a)(1), (3), and (4) of the Act; and
    (iii) In the case of invoicing, the information required to be 
disclosed under section 5(b)(1)(A), (C), and (D) of the Act.
    (b) Where a fur product is exempt under this section from the 
requirements of the act and regulations, the manufacturer thereof shall 
maintain, in addition to the other records required under the act and 
regulations, adequate records showing the cost of the fur used in such 
fur product, or copies of invoices showing the manufacturer's selling 
price of the fur product, provided such price is used as the basis for 
exemption. Such records shall be preserved for at least three years.
    (c) If a fur product is exempt under this section and the 
manufacturer's selling price exceeds one hundred fifty dollars ($150), 
the manufacturer's or wholesaler's invoice shall carry information 
indicating such fur product is exempt from the provisions of the Act and 
regulations in this part; as for example: ``FPL EXEMPT.''

[17 FR 6075, July 8, 1952, as amended at 26 FR 3187, Apr. 14, 1961; 26 
FR 3771, May 2, 1961; 34 FR 381, Jan. 10, 1969; 63 FR 7517, Feb. 13, 
1998; 65 FR 82270, Dec. 28, 2000]



Sec. 301.40  Item number or mark to be assigned to each fur product.

    (a) For the purpose of identification, each fur product shall be 
assigned a separate item number or mark by the manufacturer thereof: 
Provided, however, That where all of the furs used in a group of fur 
products are obtained through the same purchase and from the same source 
and all of the required information with respect to such furs is 
identical, then a single item number or mark may be assigned to identify 
all of the fur products in such group. Each number or mark so assigned 
shall appear on the required label and invoice pertaining to such 
product and used for the identification thereof in the records required 
by Sec. 301.41 of this part.
    (b) Any subsequent dealer in fur products may assign to each fur 
product handled a different item number or mark to be used on the 
required label and invoice pertaining to such product, in lieu of that 
of the manufacturer or other supplier, and for the identification of 
such fur product in the records required by Sec. 301.41 of this part.



Sec. 301.41  Maintenance of records.

    (a) Pursuant to section 3(e) and section 8(d)(1), of the Act, each 
manufacturer or dealer in fur products or furs (including dressers, 
dyers, bleachers and processors), irrespective of whether any guaranty 
has been given or received, shall maintain records showing all of the 
required information relative to such fur products or furs in such 
manner as will readily identify each fur or fur product manufactured or 
handled. Such records shall show:
    (1) That the fur product contains or is composed of natural, 
pointed, bleached, dyed, tip-dyed or otherwise artificially colored fur, 
when such is the fact;
    (2) That the fur product contains used fur, when such is the fact;
    (3) The name or names (as set forth in the Fur Products Name Guide) 
of the animal or animals that produced the fur;
    (4) That the fur product is composed in whole or in substantial part 
of paws, tails, bellies, sides, flanks, gills, ears, throats, heads, 
scrap pieces, or waste fur, when such is the fact;
    (5) The name of the country of origin of any imported furs used in 
the fur products;

[[Page 218]]

    (6) The name, or other identification issued and registered by the 
Commission, of one or more of the persons who manufacture, import, sell, 
advertise, offer, transport or distribute the fur product in commerce.
    (7) The item number assigned, or reassigned, to each fur or fur 
product as set out in Sec. 301.40
    (b) The purpose of the records is to permit a determination that the 
requirements of the Act and Regulations have been met and to establish a 
traceable line of continuity from raw material through processing to 
finished product. The records shall be preserved for at least three 
years.

[53 FR 31315, Aug. 18, 1988]



Sec. 301.42  Deception as to nature of business.

    When necessary to avoid deception, the name of any person other than 
the manufacturer of the fur product appearing on the label or invoice 
shall be accompanied by appropriate words showing that the fur product 
was not manufactured by such person; as for example:

Distributed by ------------

 or

------------ Wholesalers



Sec. 301.43  Use of deceptive trade or corporate names, trademarks or 
graphic representations prohibited.

    No person shall use in labeling, invoicing or advertising any fur or 
fur product a trade name, corporate name, trademark or other trade 
designation or graphic representation which misrepresents directly or by 
implication to purchasers, prospective purchasers or the consuming 
public:
    (a) The character of the product including method of construction;
    (b) The name of the animal producing the fur;
    (c) The method or manner of distribution; or
    (d) The geographical or zoological origin of the fur.

[61 FR 67710, Dec. 24, 1996]



Sec. 301.44  Misrepresentation of prices.

    (a) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product at alleged wholesale prices or at alleged 
manufacturers cost or less, unless such representations are true in 
fact; nor shall any person advertise a fur or fur product at prices 
purported to be reduced from what are in fact fictitious prices, nor at 
a purported reduction in price when such purported reduction is in fact 
fictitious.
    (b) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product with comparative prices and percentage savings 
claims except on the basis of current market values or unless the time 
of such compared price is given.
    (c) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being ``made to sell for'', being ``worth'' 
or ``valued at'' a certain price, or by similar statements, unless such 
claim or representation is true in fact.
    (d) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being of a certain value or quality unless 
such claims or representations are true in fact.
    (e) Persons making pricing claims or representations of the types 
described in paragraphs (a), (b), (c) and (d) of this section shall 
maintain full and adequate records disclosing the facts upon which such 
claims or representations are based.
    (f) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product by the use of an illustration which shows such 
fur or fur product to be a higher priced product than the one so 
advertised.
    (g) No person shall, with respect to a fur or fur product, advertise 
such fur or fur product as being ``bankrupt stock'', ``samples'', ``show 
room models'', ``Hollywood Models'', ``Paris Models'', ``French 
Models'', ``Parisian Creations'', ``Furs Worn by Society Women'', 
``Clearance Stock'', ``Auction Stock'', ``Stock of a business in a state 
of liquidation'', or similar statements, unless such representations or 
claims are true in fact.



Sec. 301.45  Representations as to construction of fur products.

    (a) No misleading nor deceptive statements as to the construction of 
fur products shall be used directly or

[[Page 219]]

indirectly in labeling, invoicing or advertising such products. (For 
example, a fur product made by the skin-on-skin method should not be 
represented as having been made by the letout method.)
    (b) Where a fur product is made by the method known in the trade as 
letting-out, or is made of fur which has been sheared or plucked, such 
facts may be set out in labels, invoices and advertising.



Sec. 301.46  Reference to guaranty by Government prohibited.

    No representation nor suggestion that a fur or fur product is 
guaranteed under the act by the Government, or any branch thereof, shall 
be made in the labeling, invoicing or advertising in connection 
therewith.



Sec. 301.47  Form of separate guaranty.

    The following is a suggested form of separate guaranty under section 
10 of the Act which may be used by a guarantor residing in the United 
States, on and as part of an invoice in which the merchandise covered is 
listed and specified and which shows the date of such document, the date 
of shipment of the merchandise and the signature and address of the 
guarantor:

    We guarantee that the fur products or furs specified herein are not 
misbranded nor falsely nor deceptively advertised or invoiced under the 
provisions of the Fur Products Labeling Act and rules and regulations 
thereunder.



Sec. 301.48  Continuing guaranty filed with Federal Trade Commission.

    (a)(1) Under section 10 of the Act any person residing in the United 
States and handling fur or fur products may file a continuing guaranty 
with the Federal Trade Commission. When filed with the Commission a 
continuing guaranty shall be fully executed in duplicate. Forms for use 
in preparing continuing guaranties shall be supplied by the Commission 
upon request.
    (2) Continuing guaranties filed with the Commission shall continue 
in effect until revoked. The guarantor shall promptly report any change 
in business status to the Commission.
    (3) The prescribed form for a continuing guaranty is found in Sec. 
303.38(b) of this chapter. The form is available upon request from the 
Textile Section, Enforcement Division, Federal Trade Commission, 600 
Pennsylvania Avenue, NW, Washington, DC 20580.
    (b) Any person who has a continuing guaranty on file with the 
Commission may, during the effective date of the guaranty, give notice 
of such fact by setting forth on the invoice or other paper covering the 
marketing or handling of the product guaranteed the following: 
``Continuing guaranty under the Fur Products Labeling Act filed with the 
Federal Trade Commission.''
    (c) Any person who falsely represents in writing that he has a 
continuing guaranty on file with the Federal Trade Commission when such 
is not a fact shall be deemed to have furnished a false guaranty under 
section 10(b) of the Act.

[26 FR 3188, Apr. 14, 1961, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7517, Feb. 13, 1998; 63 FR 71583, Dec. 28, 1998]



Sec. 301.48a  Guaranties not received in good faith.

    A guaranty shall not be deemed to have been received in good faith 
within the meaning of section 10(a) of the Act:
    (a) Unless the recipient of such guaranty shall have examined the 
required label, required invoice and advertisement relating to the fur 
product or fur so guaranteed;
    (b) If the recipient of the guaranty has knowledge that the fur or 
fur product guaranteed is misbranded, falsely invoiced or falsely 
advertised.

[26 FR 3188, Apr. 14, 1961]



Sec. 301.49  Deception in general.

    No furs nor fur products shall be labeled, invoiced, or advertised 
in any manner which is false, misleading or deceptive in any respect.



PART 303_RULES AND REGULATIONS UNDER THE TEXTILE FIBER PRODUCTS 
IDENTIFICATION ACT--Table of Contents




Sec.
303.1 Terms defined.
303.2 General requirements.
303.3 Fibers present in amounts of less than 5 percent.
303.4 English language requirement.

[[Page 220]]

303.5 Abbreviations, ditto marks, and asterisks prohibited.
303.6 Generic names of fibers to be used.
303.7 Generic names and definitions for manufactured fibers.
303.8 Procedure for establishing generic names for manufactured fibers.
303.9 Use of fur-bearing animal names and symbols prohibited.
303.10 Fiber content of special types of products.
303.11 Floor coverings containing backings, fillings, and paddings.
303.12 Trimmings of household textile articles.
303.13 Sale of remnants and products made of remnants.
303.14 Products containing unknown fibers.
303.15 Required label and method of affixing.
303.16 Arrangement and disclosure of information on labels.
303.17 Use of fiber trademarks and generic names on labels.
303.18 Terms implying fibers not present.
303.19 Name or other identification required to appear on labels.
303.20 Registered identification numbers.
303.21 Marking of samples, swatches, or specimens and products sold 
          therefrom.
303.22 Products containing linings, interlinings, fillings, and 
          paddings.
303.23 Textile fiber products containing superimposed or added fibers.
303.24 Pile fabrics and products composed thereof.
303.25 Sectional disclosure of content.
303.26 Ornamentation.
303.27 Use of the term ``All'' or ``100%.''
303.28 Products contained in packages.
303.29 Labeling of pairs or products containing two or more units.
303.30 Textile fiber products in form for consumer.
303.31 Invoice in lieu of label.
303.32 Products containing reused stuffing.
303.33 Country where textile fiber products are processed or 
          manufactured.
303.34 Country of origin in mail order advertising.
303.35 Use of terms ``virgin'' or ``new.''
303.36 Form of separate guaranty.
303.37 Form of continuing guaranty from seller to buyer.
303.38 Continuing guaranty filed with Federal Trade Commission.
303.39 Maintenance of records.
303.40 Use of terms in written advertisements that imply presence of a 
          fiber.
303.41 Use of fiber trademarks and generic names in advertising.
303.42 Arrangement of information in advertising textile fiber products.
303.43 Fiber content tolerances.
303.44 Products not intended for uses subject to the act.
303.45 Exclusions from the act.

    Authority: 15 U.S.C. 70 et seq.

    Source: 24 FR 4480, June 2, 1959, unless otherwise noted.



Sec. 303.1  Terms defined.

    As used in this part, unless the context otherwise specifically 
requires:
    (a) The term Act means the Textile Fiber Products Identification Act 
(approved September 2, 1958, 85th Congress, 2d Sess.; 15 U.S.C. 70, 72 
Stat. 1717).
    (b) The terms rule, rules, regulations, and rules and regulations 
mean the rules and regulations prescribed by the Commission pursuant to 
section 7(c) of the Act.
    (c) The definition of terms contained in section 2 of the Act shall 
be applicable also to such terms when used in rules promulgated under 
the Act.
    (d) The term United States means the several States, the District of 
Columbia, and the Territories and possessions of the United States.
    (e) The terms required information and information required mean 
such information as is required to be disclosed on labels or invoices 
and in advertising under the Act and regulations.
    (f) The terms label, labels, labeled, and labeling mean the stamp, 
tag, label, or other means of identification, or authorized substitute 
therefor, required to be on or affixed to textile fiber products by the 
Act and regulations and on which the information required is to appear.
    (g) The terms marketing or handling and marketed or handled, when 
applied to textile fiber products, mean any one or all of the 
transactions set forth in section 3 of the Act.
    (h) The terms invoice and invoice or other paper mean an account, 
order, memorandum, list, or catalog, which is issued to a purchaser, 
consignee, bailee, correspondent, agent, or any other person, in writing 
or in some other form capable of being read and preserved in a tangible 
form, in connection with the marketing or handling of any textile fiber 
product transported or delivered to such person.
    (i) The term outer coverings of furniture, mattresses, and box 
springs means those coverings as are permanently incorporated in such 
articles.

[[Page 221]]

    (j) The term wearing apparel means any costume or article of 
clothing or covering for any part of the body worn or intended to be 
worn by individuals.
    (k) The term beddings means sheets, covers, blankets, comforters, 
pillows, pillowcases, quilts, bedspreads, pads, and all other textile 
fiber products used or intended to be used on or about a bed or other 
place for reclining or sleeping but shall not include furniture, 
mattresses or box springs.
    (l) The term headwear means any textile fiber product worn 
exclusively on or about the head or face by individuals.
    (m) The term backings, when applied to floor coverings, means that 
part of a floor covering to which the pile, face, or outer surface is 
woven, tufted, hooked, knitted, or otherwise attached, and which 
provides the structural base of the floor covering. The term backing 
shall also include fabrics attached to the structural base of the floor 
covering in such a way as to form a part of such structural base, but 
shall not include the pile, face, or outer surface of the floor covering 
or any part thereof.
    (n) The term elastic material means a fabric composed of yarn 
consisting of an elastomer or a covered elastomer.
    (o) The term coated fabric means any fabric which is coated, filled, 
impregnated, or laminated with a continuous-film-forming polymeric 
composition in such a manner that the weight added to the base fabric is 
at least 35 percent of the weight of the fabric before coating, filling, 
impregnation, or lamination.
    (p) The term upholstered product means articles of furniture 
containing stuffing and shall include mattresses and box springs.
    (q) The term ornamentation means any fibers or yarns imparting a 
visibly discernible pattern or design to a yarn or fabric.
    (r) The term fiber trademark means a word or words used by a person 
to identify a particular fiber produced or sold by him and to 
distinguish it from fibers of the same generic class produced or sold by 
others. Such term shall not include any trade mark, product mark, house 
mark, trade name or other name which does not identify a particular 
fiber.
    (s) The term wool means the fiber from the fleece of the sheep or 
lamb or hair of the Angora or Cashmere goat (and may include the so-
called specialty fibers from the hair of the camel, alpaca, llama, and 
vicuna) which has never been reclaimed from any woven or felted wool 
product.
    (t) The term recycled wool means (1) the resulting fiber when wool 
has been woven or felted into a wool product which, without ever having 
been utilized in any way by the ultimate consumer, subsequently has been 
made into a fibrous state, or (2) the resulting fiber when wool or 
reprocessed wool has been spun, woven, knitted, or felted into a wool 
product which, after having been used in any way by the ultimate 
consumer, subsequently has been made into a fibrous state.
    (u) The terms mail order catalog and mail order promotional material 
mean any materials, used in the direct sale or direct offering for sale 
of textile products, that are disseminated to ultimate consumers in 
print or by electronic means, other than by broadcast, and that solicit 
ultimate consumers to purchase such textile products by mail, telephone, 
electronic mail, or some other method without examining the actual 
product purchased.

[24 FR 4480, June 2, 1959, as amended at 45 FR 44263, July 1, 1980; 50 
FR 15106, Apr. 17, 1985; 63 FR 7517, Feb. 13, 1998]



Sec. 303.2  General requirements.

    (a) Each textile fiber product, except those exempted or excluded 
under section 12 of the Act, shall be labeled or invoiced in conformity 
with the requirements of the Act and regulations.
    (b) Any advertising of textile fiber products subject to the Act 
shall be in conformity with the requirements of the Act and regulations.
    (c) The requirements of the Act and regulations shall not be 
applicable to products required to be labeled under the Wool Products 
Labeling Act of 1939 (Pub. L. 76-850, 15 U.S.C. 68, 54 Stat. 1128).
    (d) Any person marketing or handling textile fiber products who 
shall cause or direct a processor or finisher to label, invoice, or 
otherwise identify any textile fiber product with required information 
shall be responsible under

[[Page 222]]

the Act and regulations for any failure of compliance with the Act and 
regulations by reason of any statement or omission in such label, 
invoice, or other means of identification utilized in accordance with 
his direction: Provided, That nothing herein shall relieve the processor 
or finisher of any duty or liability to which he may be subject under 
the Act and regulations.



Sec. 303.3  Fibers present in amounts of less than 5 percent.

    (a) Except as permitted in sections 4(b)(1) and 4(b)(2) of the Act, 
as amended, no fiber present in the amount of less than 5 percent of the 
total fiber weight shall be designated by its generic name or fiber 
trademark in disclosing the constituent fibers in required information, 
but shall be designated as ``other fiber.'' When more than one of such 
fibers are present in a product, they shall be designated in the 
aggregate as ``other fibers.'' Provided, however, that nothing in this 
section shall be construed as prohibiting the disclosure of any fiber 
present in a textile fiber product which has a clearly established and 
definite functional significance when present in the amount contained in 
such product, as for example:

96 percent Acetate
4 percent Spandex.

    (b) In making such disclosure, all of the provisions of the Act and 
regulations in this part setting forth the manner and form of disclosure 
of fiber content information, including the provisions of Sec. Sec. 
303.17 and 303.41 of this part relating to the use of generic names and 
fiber trademarks, shall be applicable.

[63 FR 7518, Feb. 13, 1998]



Sec. 303.4  English language requirement.

    All required information shall be set out in the English language. 
If the required information appears in a language other than English, it 
also shall appear in the English language. The provisions of this 
section shall not apply to advertisements in foreign language newspapers 
or periodicals, but such advertising shall in all other respects comply 
with the Act and regulations.



Sec. 303.5  Abbreviations, ditto marks, and asterisks prohibited.

    (a) In disclosing required information, words or terms shall not be 
designated by ditto marks or appear in footnotes referred to by 
asterisks or other symbols in required information, and shall not be 
abbreviated except as permitted in Sec. 303.33(e) of this part.
    (b) Where the generic name of a textile fiber is required to appear 
in immediate conjunction with a fiber trademark in advertising, 
labeling, or invoicing, a disclosure of the generic name by means of a 
footnote, to which reference is made by use of an asterisk or other 
symbol placed next to the fiber trademark, shall not be sufficient in 
itself to constitute compliance with the Act and regulations.

[24 FR 4480, June 2, 1959, as amended at 65 FR 75156, Dec. 1, 2000]



Sec. 303.6  Generic names of fibers to be used.

    (a) Except where another name is permitted under the Act and 
regulations, the respective generic names of all fibers present in the 
amount of 5 per centum or more of the total fiber weight of the textile 
fiber product shall be used when naming fibers in the required 
information; as for example: ``cotton,'' ``rayon,'' ``silk,'' ``linen,'' 
``nylon,'' etc.
    (b) Where a textile fiber product contains the hair or fiber of a 
fur-bearing animal present in the amount 5 per centum or more of the 
total fiber weight of the product, the name of the animal producing such 
fiber may be used in setting forth the required information, provided 
the name of such animal is used in conjunction with the words ``fiber,'' 
``hair,'' or ``blend;'' as for example:

80 percent Rabbit hair.
20 percent Nylon.

 or

80 percent Silk.
20 percent Mink fiber.

    (c) The term fur fiber may be used to describe the hair or fur fiber 
or mixtures thereof of any animal or animals other than the sheep, lamb, 
Angora goat, Cashmere goat, camel, alpaca, llama or vicuna where such 
hair or fur fiber or mixture is present in the

[[Page 223]]

amount of 5 per centum or more of the total fiber weight of the textile 
fiber product and no direct or indirect representations are made as to 
the animal or animals from which the fiber so designated was obtained; 
as for example:

60 percent Cotton.
40 percent Fur fiber.

 or

50 percent Nylon.
30 percent Mink hair.
20 percent Fur fiber.

    (d) Where textile fiber products subject to the Act contain (1) wool 
or (2) recycled wool in amounts of five per centum or more of the total 
fiber weight, such fibers shall be designated and disclosed as wool or 
recycled wool as the case may be.

[24 FR 4480, June 2, 1959, as amended at 45 FR 44263, July 1, 1980]



Sec. 303.7  Generic names and definitions for manufactured fibers.

    Pursuant to the provisions of section 7(c) of the Act, the 
Commission hereby establishes the generic names for manufactured fibers, 
together with their respective definitions, set forth in this section, 
and the generic names for manufactured fibers, together with their 
respective definitions, set forth in International Organization for 
Standardization ISO 2076: 1999(E), ``Textiles--Man-made fibres--Generic 
names.'' This incorporation by reference was approved by the Director of 
the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 
51. Copies may be obtained from the American National Standards 
Institute, 11 West 42nd St., 13th floor, New York, NY 10036. Copies may 
be inspected at the Federal Trade Commission, Room 130, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580, or at the National Archives and 
Records Administration (NARA). For information on the availability of 
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html.
    (a) Acrylic. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85 
percent by weight of acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.004

    (b) Modacrylic. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of less than 85 
percent but at least 35 percent by weight of acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.005


except fibers qualifying under paragraph (j)(2) of this section and 
fibers qualifying under paragraph (q) of this section. (Sec. 7, 72 Stat. 
1717; 15 U.S.C. section 70e)
    (c) Polyester. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85% 
by weight of an ester of a substituted aromatic carboxylic acid, 
including but not restricted to substituted terephthalate units,
[GRAPHIC] [TIFF OMITTED] TC29SE91.006


and para substituted hydroxy-benzoate units,
[GRAPHIC] [TIFF OMITTED] TC29SE91.007


Where the fiber is formed by the interaction of two or more chemically 
distinct polymers (of which none exceeds 85% by weight), and contains 
ester groups as the dominant functional unit (at least 85% by weight of 
the total polymer content of the fiber), and which, if stretched at 
least 100%, durably and rapidly reverts substantially to its unstretched 
length when the tension is removed, the term elasterell-p may be used as 
a generic description of the fiber.
    (d) Rayon--A manufactured fiber composed of regenerated cellulose, 
as well as manufactured fibers composed

[[Page 224]]

of regenerated cellulose in which substituents have replaced not more 
than 15% of the hydrogens of the hydroxyl groups. Where the fiber is 
composed of cellulose precipitated from an organic solution in which no 
substitution of the hydroxyl groups takes place and no chemical 
intermediates are formed, the term lyocell may be used as a generic 
description of the fiber.
    (e) Acetate. A manufactured fiber in which the fiber-forming 
substance is cellulose acetate. Where not less than 92 percent of the 
hydroxyl groups are acetylated, the term triacetate may be used as a 
generic description of the fiber.
    (f) Saran. A manufactured fiber in which the fiber-forming substance 
is any long chain synthetic polymer composed of at least 80 percent by 
weight of vinylidene chloride units (-CH9-CCl2-).
    (g) Azlon. A manufactured fiber in which the fiber-forming substance 
is composed of any regenerated naturally occurring proteins.
    (h) Nytril. A manufactured fiber containing at least 85 percent of a 
long chain polymer of vinylidene dinitrile (-CH2-
C(CN)2-) where the vinylidene dinitrile content is no less 
than every other unit in the polymer chain.
    (i) Nylon. A manufactured fiber in which the fiber-forming substance 
is a long-chain synthetic polyamide in which less than 85 percent of the 
amide
[GRAPHIC] [TIFF OMITTED] TC29SE91.008


linkages are attached directly to two aromatic rings.
    (j) Rubber. A manufactured fiber in which the fiber-forming 
substance is comprised of natural or synthetic rubber, including the 
following categories:
    (1) A manufactured fiber in which the fiber-forming substance is a 
hydrocarbon such as natural rubber, polyisoprene, polybutadiene, 
copolymers of dienes and hydrocarbons, or amorphous (noncrystalline) 
polyolefins.
    (2) A manufactured fiber in which the fiber-forming substance is a 
copolymer of acrylonitrile and a diene (such as butadiene) composed of 
not more than 50 percent but at least 10 percent by weight of 
acrylonitrile units
[GRAPHIC] [TIFF OMITTED] TC29SE91.009


The term lastrile may be used as a generic description for fibers 
falling within this category.
    (3) A manufactured fiber in which the fiber-forming substance is a 
polychloroprene or a copolymer of chloroprene in which at least 35 
percent by weight of the fiber-forming substance is composed of 
chloroprene units
[GRAPHIC] [TIFF OMITTED] TC29SE91.010

    (k) Spandex. A manufactured fiber in which the fiber-forming 
substance is a long chain synthetic polymer comprised of at least 85 
percent of a segmented polyurethane.
    (l) Vinal. A manufactured fiber in which the fiber-forming substance 
is any long chain synthetic polymer composed of at least 50 percent by 
weight of vinyl alcohol units (-CH2-CHOH-), and in which the 
total of the vinyl alcohol units and any one or more of the various 
acetal units is at least 85 percent by weight of the fiber.
    (m) Olefin. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 85 
percent by weight of ethylene, propylene, or other olefin units, except 
amorphous (noncrystalline) polyolefins qualifying under paragraph (j)(1) 
of this section [Rule 7]. Where the fiber-forming substance is a cross-
linked synthetic polymer, with low but significant crystallinity, 
composed of at least 95 percent by weight of ethylene and at least one 
other olefin unit, and the fiber is substantially elastic and heat 
resistant, the term lastol may be used as a generic description of the 
fiber.
    (n) Vinyon. A manufactured fiber in which the fiber-forming 
substance is

[[Page 225]]

any long chain synthetic polymer composed of at least 85 percent by 
weight of vinyl chloride units (-CH2-CHCl-).
    (o) Metallic. A manufactured fiber composed of metal, plastic-coated 
metal, metal-coated plastic, or a core completely covered by metal.
    (p) Glass. A manufactured fiber in which the fiber-forming substance 
is glass.
    (q) Anidex. A manufactured fiber in which the fiber-forming 
substance is any long chain synthetic polymer composed of at least 50 
percent by weight of one or more esters of a monohydric alcohol and 
acrylic acid, CH2=CH--COOH.
    (r) Novoloid. A manufactured fiber containing at least 85 percent by 
weight of a cross-linked novolac.
    (s) Aramid. A manufactured fiber in which the fiber-forming 
substance is a long-chain synthetic polyamide in which at least 85 
percent of the amide
[GRAPHIC] [TIFF OMITTED] TC29SE91.011


linkages are attached directly to two aromatic rings.
    (t) Sulfar. A manufactured fiber in which the fiber-forming 
substance is a long chain synthetic polysulfide in which at least 85% of 
the sulfide (--S--) linkages are attached directly to two (2) aromatic 
rings.
    (u) PBI. A manufactured fiber in which the fiber-forming substance 
is a long chain aromatic polymer having reoccurring imidazole groups as 
an integral part of the polymer chain.
    (v) Elastoester. A manufactured fiber in which the fiber-forming 
substance is a long-chain synthetic polymer composed of at least 50% by 
weight of aliphatic polyether and at least 35% by weight of polyester, 
as defined in 16 CFR 303.7(c).
    (w) Melamine. A manufactured fiber in which the fiber-forming 
substance is a synthetic polymer composed of at least 50% by weight of a 
cross-linked melamine polymer.
    (x) Fluoropolymer. A manufactured fiber containing at least 95% of a 
long-chain polymer synthesized from aliphatic fluorocarbon monomers.
    (y) PLA. A manufactured fiber in which the fiber-forming substance 
is composed of at least 85% by weight of lactic acid ester units derived 
from naturally occurring sugars.

(Sec. 6, 72 Stat. 1717; 15 U.S.C. 70e)

[24 FR 4480, June 2, 1959; 24 FR 5737, July 17, 1959, as amended at 31 
FR 2652, Feb. 11, 1966; 31 FR 3002, Feb. 22, 1966; 34 FR 14595, Sept. 
19, 1969; 38 FR 21782, Aug. 13, 1973; 38 FR 34115, Dec. 11, 1973; 39 FR 
1834, Jan. 15, 1974; 51 FR 20807, 20809, June 9, 1986; 61 FR 16387, Apr. 
15, 1996; 62 FR 28344, May 23, 1997; 63 FR 7518, Feb. 13, 1998; 63 FR 
36174, July 2, 1998; 63 FR 71583, Dec. 28, 1998; 65 FR 75156, Dec. 1, 
2000; 67 FR 4903, Feb. 1, 2002; 67 FR 70839, Nov. 27, 2002; 68 FR 3816, 
Jan. 27, 2003; 69 FR 18803, Apr. 9, 2004]



Sec. 303.8  Procedure for establishing generic names for manufactured 
fibers.

    (a) Prior to the marketing or handling of a manufactured fiber for 
which no generic name has been established or otherwise recognized by 
the Commission, the manufacturer or producer thereof shall file a 
written application with the Commission, requesting the establishment of 
a generic name for such fiber, stating therein:
    (1) The reasons why the applicant's fiber should not be identified 
by one of the generic names established by the Commission in Sec. 303.7 
of this part;
    (2) The chemical composition of the fiber, including the fiber-
forming substances and respective percentages thereof, together with 
samples of the fiber;
    (3) Suggested names for consideration as generic, together with a 
proposed definition for the fiber;
    (4) Any other information deemed by the applicant to be pertinent to 
the application, including technical data in the form of test methods;
    (5) The earliest date on which the application proposes to market or 
handle the fiber in commerce for other than developmental or testing 
purposes.
    (b) Upon receipt of the application, the Commission will, within 
sixty (60) days, either deny the application or assign to the fiber a 
numerical or alphabetical symbol for temporary use during further 
consideration of such application.

[[Page 226]]

    (c) After taking the necessary procedure in consideration of the 
application, the Commission in due course shall establish a generic name 
or advise the applicant of its refusal to grant the application and 
designate the proper existing generic name for the fiber.

[24 FR 4480, June 2, 1959, as amended at 63 FR 7518, Feb. 13, 1998]



Sec. 303.9  Use of fur-bearing animal names and symbols prohibited.

    (a) The advertising or the labeling of a textile fiber product shall 
not contain any names, words, depictions, descriptive matter, or other 
symbols which connote or signify a fur-bearing animal, unless such 
product or the part thereof in connection with which the names, words, 
depictions, descriptive matter, or other symbols are used is a fur 
product within the meaning of the Fur Products Labeling Act.
    (b) Subject to the provisions of paragraph (a) of this section and 
Sec. 303.6 of this part, a textile fiber product shall not be described 
or referred to in any manner in an advertisement or label with:
    (1) The name or part of the name of a fur-bearing animal, whether as 
a single word or a combination word, or any coined word which is 
phonetically similar to a fur-bearing animal name, or which is only a 
slight variation in spelling of a fur-bearing animal name or part of the 
name. As for example, such terms as ``Ermine,'' ``Mink,'' ``Persian,'' 
``Broadtail,'' ``Beaverton,'' ``Marmink,'' ``Sablelon,'' ``Lam,'' 
``Pershian,'' ``Minx,'' or similar terms shall not be used.
    (2) Any word or name symbolic of a fur-bearing animal by reason of 
conventional usage or by reason of its close relationship with fur-
bearing animals. As for example, such terms as ``guardhair,'' 
``underfur,'' and ``mutation,'' or similar terms, shall not be used.
    (c) Nothing contained herein shall prevent:
    (1) The nondeceptive use of animal names or symbols in referring to 
a textile fiber product where the fur of such animal is not commonly or 
commercially used in fur products, as that term is defined in the Fur 
Products Labeling Act, as for example ``kitten soft'', ``Bear Brand'', 
etc.
    (2) The nondeceptive use of a trademark or trade name containing the 
name, symbol, or depiction of a fur-bearing animal unless:
    (i) The textile fiber product in connection with which such 
trademark or trade name is used simulates a fur or fur product; or
    (ii) Such trademark or trade name is used in any advertisement of a 
textile fiber product together with any depiction which has the 
appearance of a fur or fur product; or
    (iii) The use of such trademark or trade name is prohibited by the 
Fur Products Labeling Act.

[24 FR 4480, June 2, 1959, as amended at 28 FR 722, Jan. 16, 1963]



Sec. 303.10  Fiber content of special types of products.

    (a) Where a textile product is made wholly of elastic yarn or 
material, with minor parts of non-elastic material for structural 
purposes, it shall be identified as to the percentage of the elastomer, 
together with the percentage of all textile coverings of the elastomer 
and all other yarns or materials used therein.

Where a textile fiber product is made in part of elastic material and in 
part of other fabric, the fiber content of such fabric shall be set 
forth sectionally by percentages as in the case of other fabrics. In 
such cases the elastic material may be disclosed by describing the 
material as elastic followed by a listing in order of predominance by 
weight of the fibers used in such elastic, including the elastomer, 
where such fibers are present by 5 per centum or more with the 
designation ``other fiber'' or ``other fibers'' appearing last when 
fibers required to be so designated are present. An example of labeling 
under this paragraph is:

Front and back non-elastic sections:
 50 percent Acetate.
 50 percent Cotton.
Elastic: Rayon, cotton, nylon, rubber.

    (b) Where drapery or upholstery fabrics are manufactured on hand-
operated looms for a particular customer after the sale of such fabric 
has been consummated, and the amount of the

[[Page 227]]

order does not exceed 100 yards (91.44 m) of fabric, the required fiber 
content disclosure may be made by listing the fibers present in order of 
predominance by weight with any fiber or fibers required to be 
designated as ``other fiber'' or ``other fibers'' appearing last, as for 
example:

Rayon
Wool
Acetate
Metallic
Other fibers

    (c)(1) Where a manufactured textile fiber is essentially a physical 
combination or mixture of two or more chemically distinct constituents 
or components combined at or prior to the time of extrusion, which 
components if separately extruded would each fall within different 
existing definitions of textile fibers as set forth in Sec. 303.7 of 
this part (Rule 7), the fiber content disclosure as to such fiber, shall 
for all purposes under the regulations in this part (i) disclose such 
fact in the required fiber content information by appropriate 
nondeceptive descriptive terminology, such as ``biconstituent fiber'' or 
``multiconstituent fiber,'' (ii) set out the components contained in the 
fiber by the appropriate generic name specified in Sec. 303.7 of this 
part (Rule 7) in the order of their predominance by weight, and (iii) 
set out the respective percentages of such components by weight.
    (2) If the components of such fibers are of a matrix-fibril 
configuration, the term matrix-fibril fiber or matrix fiber may be used 
in setting forth the information required by this paragraph.
    (3) Examples of proper fiber content designations under this 
paragraph are:

100% Biconstituent Fiber
(65% Nylon, 35% Polyester)
80% Matrix Fiber (60% Nylon, 40% Polyester)
15% Polyester
5% Rayon

    (4) All of the provisions as to fiber content disclosures contained 
in the Act and regulations, including the provisions relative to fiber 
content tolerances and disclosures of fibers present in amounts of less 
than 5 percentum of the total fiber weight, shall also be applicable to 
the designations and disclosures prescribed by this paragraph.

[25 FR 7044, July 26, 1960, as amended at 30 FR 14253, Nov. 13, 1965; 34 
FR 12134 July 19, 1969; 61 FR 11544, Mar. 21, 1996]



Sec. 303.11  Floor coverings containing backings, fillings, and paddings.

    In disclosing the required fiber content information as to floor 
coverings containing exempted backings, fillings, or paddings, the 
disclosure shall be made in such manner as to indicate that it relates 
only to the face, pile, or outer surface of the floor covering and not 
to the backing, filling, or padding. Examples of the form of marking 
these types of floor coverings as to fiber content are as follows:

100% Cotton Pile
Face--60% Rayon, 40% Cotton
Outer Surface--100% Wool



Sec. 303.12  Trimmings of household textile articles.

    (a) Trimmings incorporated in articles of wearing apparel and other 
household textile articles may, among other forms of trim, include: (1) 
Rick-rack, tape, belting, binding, braid, labels (either required or 
non-required), collars, cuffs, wrist bands, leg bands, waist bands, 
gussets, gores, welts, and findings, including superimposed garters in 
hosiery, and elastic materials and threads inserted in or added to the 
basic product or garment in minor proportion for holding, reinforcing or 
similar structural purposes; (2) decorative trim, whether applied by 
embroidery, overlay, applique, or attachment; and (3) decorative 
patterns or designs which are an integral part of the fabric out of 
which the household textile article is made: Provided, That such 
decorative trim or decorative pattern or design, as specified in 
paragraphs (a) (2) and (3) of this section, does not exceed 15 percent 
of the surface area of the household textile article. If no 
representation is made as to the fiber content of the decorative trim or 
decoration, as provided for in paragraphs (a) (2) and (3) of this 
section, the fiber content designation of the basic fabric shall be 
followed by the statement ``exclusive of decoration.''

[[Page 228]]

    (b) The term findings may also include elastic material which 
constitutes a part of the basic fabric or material out of which the 
household textile article is made, where such elastic material does not 
exceed 20 percent of the surface area of the household textile article: 
Provided, That the required information as to fiber content of products 
subject to this paragraph is followed by the statement ``exclusive of 
elastic.''



Sec. 303.13  Sale of remnants and products made of remnants.

    (a) In disclosing the required fiber content information as to 
remnants of fabric which are for practical purposes of unknown or 
undeterminable fiber content:
    (1) The fiber content disclosure of such remnants of fabrics may be 
designated in the required information as ``remnants of undetermined 
fiber content.''
    (2) Where such remnants of fabrics are displayed for sale at retail, 
a conspicuous sign may, in lieu of individual labeling, be used in 
immediate conjunction with such display, stating with respect to 
required fiber content disclosure that the goods are ``remnants of 
undetermined fiber content.''
    (3) Where textile fiber products are made of such remnants, the 
required fiber content information of the products may be disclosed as 
``made of remnants of undetermined fiber content.'' If any 
representations as to fiber content are made with respect to such 
remnants, the provisions of this paragraph shall not apply.
    (b) Where remnants of fabrics are marketed or handled in bales, 
bundles, or packages and are all of the same fiber content or are 
designated in the manner permitted by paragraph (a) of this section, the 
individual remnants need not be labeled if the bales, bundles, or 
packages containing such remnants are labeled with the required 
information including fiber content percentages or the designation 
permitted by paragraph (a) of this section.
    (c) Where remnants of fabrics of the same fiber content are 
displayed for sale at retail, a conspicuous sign may, in lieu of 
individual labeling, be used in immediate conjunction with such display, 
stating the fiber content information with respect to such remnants; as 
for example: ``remnants, 100 percent cotton,'' ``remnants, 50 percent 
rayon, 50 percent acetate,'' etc.



Sec. 303.14  Products containing unknown fibers.

    (a) Where a textile fiber product is made from miscellaneous scraps, 
rags, odd lots, secondhand materials, textile by-products, or waste 
materials of unknown, and for practical purposes, undeterminable fiber 
content, the required fiber content disclosure may, when truthfully 
applicable, in lieu of the fiber content disclosure otherwise required 
by the Act and regulations, indicate that such product is composed of 
miscellaneous scraps, rags, odd lots, textile by-products, secondhand 
materials (in case of secondhand materials, words of like import may be 
used) or waste materials, as the case may be, of unknown or undetermined 
fiber content, as for example:

Made of miscellaneous scraps of undetermined fiber content
100% unknown fibers--rags
All undetermined fibers--textile by-products
100% miscellaneous odd lots of undetermined fiber content
Secondhand materials--fiber content unknown
Made of unknown fibers--waste materials

    (b) Where a textile fiber product is made in part from miscellaneous 
scraps, rags, odd lots, textile by-products, second-hand materials or 
waste materials of unknown and, for practical purposes, undeterminable 
fiber content together with a percentage of known or determinable 
fibers, the required fiber content disclosure may, when truthfully 
applicable, in lieu of the fiber content disclosure otherwise required 
by the Act and regulations, indicate the percentage of miscellaneous 
scraps, rags, odd lots, secondhand materials (in case of secondhand 
materials, words of like import may be used), textile by-products, or 
waste materials of unknown or undetermined fiber content and the 
percentage of known fibers, as for example:

45% Rayon
30% Acetate
25% Miscellaneous scraps of undetermined fiber content.


[[Page 229]]


60% Cotton
40% Unknown fibers--waste materials.

40% Acrylic
20% Modacrylic
40% Undetermined fibers--odd lots.

50% Polyester
30% Cotton
20% Textile by-products of undetermined fiber content.

50% Rayon
50% Secondhand materials--fiber content unknown.

45% Acetate
30% Cotton
25% Miscellaneous rags--undetermined fiber content.

    (c) No representation as to fiber content shall be made as to any 
textile product or any portion of a textile fiber product designated as 
composed of unknown or undetermined fibers. If any such representation 
is made, a full and complete fiber content disclosure shall be required.
    (d) Nothing contained in this section shall excuse a full disclosure 
as to fiber content if the same is known or practically ascertainable.

[25 FR 4317, May 14, 1960]



Sec. 303.15  Required label and method of affixing.

    (a) A label is required to be affixed to each textile product and, 
where required, to its package or container in a secure manner. Such 
label shall be conspicuous and shall be of such durability as to remain 
attached to the product and its package throughout any distribution, 
sale, resale and until sold and delivered to the ultimate consumer.
    (b) Each textile fiber product with a neck must have a label 
disclosing the country of origin affixed to the inside center of the 
neck midway between the shoulder seams or in close proximity to another 
label affixed to the inside center of the neck. The fiber content and RN 
or name of the company may be disclosed on the same label as the country 
of origin or on another conspicuous and readily accessible label or 
labels on the inside or outside of the garment. On all other textile 
products, the required information shall be disclosed on a conspicuous 
and readily accessible label or labels on the inside or outside of the 
product. The country of origin disclosure must always appear on the 
front side of the label. Other required information may appear either on 
the front side or the reverse side of a label, provided that the 
information is conspicuous and readily accessible.
    (c) In the case of hosiery products, this section shall not be 
construed as requiring the affixing of a label to each hosiery product 
contained in a package if, (1) such hosiery products are intended for 
sale to the ultimate consumer in such package, (2) such package has 
affixed to it a label bearing the required information for the hosiery 
products contained in the package, and (3) the information on the label 
affixed to the package is equally applicable to each textile fiber 
product contained therein.

[50 FR 15106, Apr. 17, 1985, as amended at 63 FR 7518, Feb. 13, 1998]



Sec. 303.16  Arrangement and disclosure of information on labels.

    (a) Subject to the provisions of Sec. 303.15(b), information 
required by the Act and regulations in this part may appear on any label 
or labels attached to the textile fiber product, including the care 
label required by 16 CFR part 423, provided all the pertinent 
requirements of the Act and regulations in this part are met and so long 
as the combination of required information and non-required information 
is not misleading. The required information shall include the following:
    (1) The generic names and percentages by weight of the constituent 
fibers present in the textile fiber product, excluding permissive 
ornamentation, in amounts of 5 percent or more and any fibers disclosed 
in accordance with Sec. 303.3(a) shall appear in order of predominance 
by weight with any percentage of fiber or fibers required to be 
designated as ``other fiber'' or ``other fibers'' appearing last.
    (2) The name, provided for in Sec. 303.19, or registered 
identification number issued by the Commission, of the manufacturer or 
of one or more persons marketing or handling the textile fiber product.
    (3) The name of the country where such product was processed or 
manufactured, as provided for in Sec. 303.33.

[[Page 230]]

    (b) All parts of the required information shall be set forth in such 
a manner as to be clearly legible, conspicuous, and readily accessible 
to the prospective purchaser. All parts of the fiber content information 
shall appear in type or lettering of equal size and conspicuousness.
    (c) Subject to the provisions of Sec. 303.17, any non-required 
information or representations placed on the product shall not minimize, 
detract from, or conflict with required information and shall not be 
false, deceptive, or misleading.
    (d) Non-deceptive terms which are properly and truthfully 
descriptive of a fiber may be used in conjunction with the generic name 
of such fiber; as for example: ``100 percent cross-linked rayon,'' ``100 
percent solution dyed acetate,'' ``100 percent combed cotton,'' ``100 
percent nylon 66,'' etc.

[24 FR 4480, June 2, 1959, as amended at 25 FR 4317, May 14, 1960; 30 FR 
14254, Nov. 13, 1965; 30 FR 15313, Dec. 11, 1965; 50 FR 15107, Apr. 17, 
1985; 53 FR 31315, Aug. 18, 1988; 63 FR 7518, Feb. 13, 1998]



Sec. 303.17  Use of fiber trademarks and generic names on labels.

    (a) A non-deceptive fiber trademark may be used on a label in 
conjunction with the generic name of the fiber to which it relates. 
Where such a trademark is placed on a label in conjunction with the 
required information, the generic name of the fiber must appear in 
immediate conjunction therewith, and such trademark and generic name 
must appear in type or lettering of equal size and conspicuousness.
    (b) Where a generic name or a fiber trademark is used on any label, 
whether required or non-required, a full and complete fiber content 
disclosure shall be made in accordance with the Act and regulations the 
first time the generic name or fiber trademark appears on the label.
    (c) If a fiber trademark is not used in the required information, 
but is used elsewhere on the label as non-required information, the 
generic name of the fiber shall accompany the fiber trademark in legible 
and conspicuous type or lettering the first time the trademark is used.
    (d) No fiber trademark or generic name shall be used in non-required 
information on a label in such a manner as to be false, deceptive, or 
misleading as to fiber content, or to indicate directly or indirectly 
that a textile fiber product is composed wholly or in part of a 
particular fiber, when such is not the case.



Sec. 303.18  Terms implying fibers not present.

    Words, coined words, symbols or depictions, (a) which constitute or 
imply the name or designation of a fiber which is not present in the 
product, (b) which are phonetically similar to the name or designation 
of such a fiber, or (c) which are only a slight variation of spelling 
from the name or designation of such a fiber shall not be used in such a 
manner as to represent or imply that such fiber is present in the 
product.

[30 FR 13693, Oct. 28, 1965]



Sec. 303.19  Name or other identification required to appear on labels.

    (a) The name required by the Act to be used on labels shall be the 
name under which the person is doing business. Where a person has a word 
trademark, used as a house mark, registered in the United States Patent 
Office, such word trademark may be used on labels in lieu of the name 
otherwise required: Provided, The owner of such word trademark furnishes 
the Commission a copy of the registration prior to its use. No 
trademark, trade names, or other names except those provided for above 
shall be used for required identification purposes.
    (b) Registered identification numbers, as provided for in Sec. 
303.20 of this part, may be used for identification purposes in lieu of 
the required name.



Sec. 303.20  Registered identification numbers.

    (a) Registered numbers for use as the required identification in 
lieu of the name on textile fiber product labels, as provided in section 
4(b)(3) of the Act, will be issued by the Commission to qualified 
persons residing in the United States upon receipt of an application 
duly executed in the form set out in paragraph (d) of this section.

[[Page 231]]

    (b)(1) Registered identification numbers shall be used only by the 
person or concern to whom they are issued, and such numbers are not 
transferable or assignable.
    (2) Registered identification numbers shall be subject to 
cancellation whenever any such number was procured or has been used 
improperly or contrary to the requirements of the Acts administered by 
the Federal Trade Commission, and regulations promulgated thereunder, or 
when otherwise deemed necessary in the public interest.
    (3) Registered identification numbers shall be subject to 
cancellation if the Commission fails to receive prompt notification of 
any change in name, business address, or legal business status of a 
person or firm to whom a registered identification number has been 
assigned, by application duly executed in the form set out in paragraph 
(d) of this section, reflecting the current name, business address, and 
legal business status of the person or firm.
    (c) Registered identification numbers assigned under this section 
may be used on labels required in labeling products subject to the 
provisions of the Wool Products Labeling Act and Fur Products Labeling 
Act, and numbers previously assigned by the Commission under such Acts 
may be used as and for the required name in labeling under this Act. 
When so used by the person or firm to whom assigned, the use of the 
numbers shall be construed as identifying and binding the applicant as 
fully and in all respects as though assigned under the specific Act for 
which it is used.
    (d) Form to apply for a registered identification number or to 
update information pertaining to an existing number (the form is 
available upon request from: Enforcement Division, Federal Trade 
Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580, or on 
the Internet at http://www.ftc.gov; application may also be made 
directly on the Internet):

[[Page 232]]

[GRAPHIC] [TIFF OMITTED] TR01DE00.024


[24 FR 4480, June 2, 1959, as amended at 48 FR 12516, Mar. 25, 1983; 63 
FR 7518, Feb. 13, 1998; 63 FR 71583, Dec. 28, 1998; 65 FR 75156, Dec. 1, 
2000]

[[Page 233]]



Sec. 303.21  Marking of samples, swatches, or specimens and products 
sold therefrom.

    (a) Where samples, swatches, or specimens of textile fiber products 
subject to the Act are used to promote or effect sales of such textile 
fiber products, the samples, swatches, or specimens, as well as the 
products themselves, shall be labeled to show their respective fiber 
contents and other required information: Provided, That such samples, 
swatches or specimens need not be labeled:
    (1) If the samples, swatches, or specimens are less than two square 
inches (12.9 cm\2\) in area and the information otherwise required to 
appear on the label is clearly, conspicuously, and non-deceptively 
disclosed on accompanying promotional matter in accordance with the Act 
and regulations.
    (2) If the samples, swatches, or specimens are keyed to a catalogue 
to which reference is necessary in order to complete the sale of the 
textile fiber products, and which catalogue at the necessary point of 
reference clearly, conspicuously, and non-deceptively discloses the 
information otherwise required to appear on the label in accordance with 
the Act and regulations; or
    (3) If such samples, swatches, or specimens are not used to effect 
sales to ultimate consumers and are not in the form intended for sale or 
delivery to, or for use by, the ultimate consumer, and are accompanied 
by an invoice or other paper showing the required information.
    (b) Where properly labeled samples, swatches, or specimens are used 
to effect the sale of articles of wearing apparel or other household 
textile articles which are manufactured specifically for a particular 
customer after the sale is consummated, the articles of wearing apparel 
or other household textile articles need not be labeled if they are of 
the same fiber content as the samples, swatches, or specimens from which 
the sale was effected and an invoice or other paper accompanies them 
showing the information otherwise required to appear on the label.

[24 FR 4480, June 2, 1959, as amended at 61 FR 11544, Mar. 21, 1996]



Sec. 303.22  Products containing linings, interlinings, fillings, and 
paddings.

    In disclosing the required information as to textile fiber products, 
the fiber content of any linings, interlinings, fillings, or paddings 
shall be set forth separately and distinctly if such linings, 
interlinings, fillings, or paddings are incorporated in the product for 
warmth rather than for structural purposes, or if any express or implied 
representations are made as to their fiber content. Examples are as 
follows:

100% Nylon
Interlining: 100% Rayon
Covering: 100% Rayon
Filling: 100% Cotton.



Sec. 303.23  Textile fiber products containing superimposed or added 
fibers.

    Where a textile fiber product is made wholly of one fiber or a blend 
of fibers with the exception of an additional fiber in minor proportion 
superimposed or added in certain separate and distinct areas or sections 
for reinforcing or other useful purposes, the product may be designated 
according to the fiber content of the principal fiber or blend of 
fibers, with an exception naming the superimposed or added fiber, giving 
the percentage thereof in relation to the total fiber weight of the 
principal fiber or blend of fibers, and indicating the area or section 
which contains the superimposed or added fiber. Examples of this type of 
fiber content disclosure, as applied to products having reinforcing 
fibers added to a particular area or section, are as follows:

55% Cotton
45% Rayon
Except 5% Nylon added to toe and heel.
All Cotton except 1% Nylon added to neckband.



Sec. 303.24  Pile fabrics and products composed thereof.

    The fiber content of pile fabrics or products composed thereof may 
be stated on the label in such segregated form as will show the fiber 
content of the face or pile and of the back or base, with percentages of 
the respective fibers as they exist in the face or pile and in the back 
or base: Provided, That

[[Page 234]]

in such disclosure the respective percentages of the face and back be 
given in such manner as will show the ratio between the face and the 
back. Examples of the form of marking pile fabric as to fiber content 
provided for in this section are as follows:

100% Nylon Pile
100% Cotton Back
(Back constitutes 60% of fabric and pile 40%).
Face--60% Rayon, 40% Nylon
Back--70% Cotton, 30% Rayon
(Face constitutes 60% of fabric and back 40%).



Sec. 303.25  Sectional disclosure of content.

    (a) Permissive. Where a textile fiber product is composed of two or 
more sections which are of different fiber composition, the required 
information as to fiber content may be separated in the same label in 
such manner as to show the fiber composition of each section.
    (b) Mandatory. The disclosure as above provided shall be made in all 
instances where such form of marking is necessary to avoid deception.



Sec. 303.26  Ornamentation.

    (a)(1) Where the textile fiber product contains fiber ornamentation 
not exceeding five per centum of the total fiber weight of the product 
and the stated percentages of the fiber content are exclusive of such 
ornamentation, the label or any invoice used in lieu thereof shall 
contain a phrase or statement showing such fact; as for example:

60% Cotton
40% Rayon

Exclusive of Ornamentation;

 or
All Cotton
Exclusive of Ornamentation.

    (2) The fiber content of such ornamentation may be disclosed where 
the percentage of the ornamentation in relation to the total fiber 
weight of the principal fiber or blend of fibers is shown; as for 
example:

70% Nylon
30% Acetate
Exclusive of 4% Metallic Ornamentation;

 or

100% Rayon
Exclusive of 3% Silk Ornamentation.

    (b) Where the fiber ornamentation exceeds five per centum, it shall 
be included in the statement of required percentages of fiber content.
    (c) Where the ornamentation constitutes a distinct section of the 
product, sectional disclosure may be made in accordance with Sec. 
303.25 of this part.



Sec. 303.27  Use of the term ``All'' or ``100%.''

    Where a textile fiber product or part thereof is comprised wholly of 
one fiber, other than any fiber ornamentation, decoration, elastic, or 
trimming as to which fiber content disclosure is not required, either 
the word All or the term 100% may be used in labeling, together with the 
correct generic name of the fiber and any qualifying phrase, when 
required; as for example: ``100% Cotton,'' ``All Rayon, Exclusive of 
Ornamentation,'' ``100% Acetate, Exclusive of Decoration,'' ``All Nylon, 
Exclusive of Elastic,'' etc.



Sec. 303.28  Products contained in packages.

    When textile products are marketed and delivered in a package which 
is intended to remain unbroken and intact until after delivery to the 
utlimate consumer, each textile product in the package, except hosiery, 
and the package shall be labeled with the required information. If the 
package is transparent to the extent it allows for a clear reading of 
the required information on the textile product, the package is not 
required to be labeled.

[50 FR 15107, Apr. 17, 1985]



Sec. 303.29  Labeling of pairs or products containing two or more units.

    (a) Where a textile fiber product consists of two or more parts, 
units, or items of different fiber content, a separate label containing 
the required information shall be affixed to each of such parts, units 
or items showing the required information as to such part, unit, or 
item: Provided, That where such parts, units, or items are marketed or 
handled as a single product or ensemble and are sold and delivered to 
the ultimate consumer as a single

[[Page 235]]

product or ensemble, the required information may be set out on a single 
label in such a manner as to separately show the fiber composition of 
each part, unit, or item.
    (b) Where garments, wearing apparel, or other textile fiber products 
are marketed or handled in pairs or ensembles of the same fiber content, 
only one unit of the pair or ensemble need be labeled with the required 
information when sold and delivered to the ultimate consumer.

[24 FR 4480, June 2, 1959, as amended at 25 FR 4318, May 14, 1960]



Sec. 303.30  Textile fiber products in form for consumer.

    A textile fiber product shall be considered to be in the form 
intended for sale or delivery to, or for use by, the ultimate consumer 
when the manufacturing or processing of the textile fiber product is 
substantially complete. The fact that minor or insignificant details of 
the manufacturing or processing have not been completed shall not excuse 
the labeling of such products as to the required information. For 
example, a garment must be labeled even though such matters as the 
finishing of a hem or cuff or the affixing of buttons thereto remain to 
be completed.



Sec. 303.31  Invoice in lieu of label.

    Where a textile fiber product is not in the form intended for sale, 
delivery to, or for use by the ultimate consumer, an invoice or other 
paper may be used in lieu of a label, and such invoice or other paper 
shall show, in addition to the name and address of the person issuing 
the invoice or other paper, the fiber content of such product as 
provided in the Act and regulations as well as any other required 
information.



Sec. 303.32  Products containing reused stuffing.

    Any upholstered product, mattress, or cushion which contains 
stuffing which has been previously used as stuffing in any other 
upholstered product, mattress, or cushion shall have securely attached 
thereto a substantial tag or label, at least 2 inches (5.08 cm) by 3 
inches (7.62 cm) in size, and statements thereon conspicuously stamped 
or printed in the English language and in plain type not less than \1/3\ 
inch (8.38 mm) high, indicating that the stuffing therein is composed in 
whole or in part of ``reused stuffing,'' ``secondhand stuffing,'' 
``previously used stuffing,'' or ``used stuffing.''

[61 FR 11544, Mar. 21, 1996]



Sec. 303.33  Country where textile fiber products are processed or 
manufactured.

    (a) In addition to the other information required by the Act and 
Regulations:
    (1) Each imported textile fiber product shall be labeled with the 
name of the country where such imported product was processed or 
manufactured;
    (2) Each textile fiber product completely made in the United States 
of materials that were made in the United States shall be labeled using 
the term Made in U.S.A. or some other clear and equivalent term.
    (3) Each textile fiber product made in the United States, either in 
whole or in part of imported materials, shall contain a label disclosing 
these facts; for example:

Made in USA of imported fabric

 or

Knitted in USA of imported yarn

    and
    (4) Each textile fiber product partially manufactured in a foreign 
country and partially manufactured in the United States shall contain on 
a label the following information:
    (i) The manufacturing process in the foreign country and in the USA; 
for example:

``Imported cloth, finished in USA''

 or

``Sewn in USA of imported components''

 or

``Made in [foreign country], finished in USA''

 or

``Scarf made in USA of fabric made in China''

 or

``Comforter Filled, Sewn and Finished in the U.S. With Shell Made in 
China''

 or
``Made in [Foreign Country]/fabric made in USA''

 or

[[Page 236]]

``Knit in USA, assembled in [Foreign Country]''.

    (ii) When the U.S. Customs Service requires an origin label on the 
unfinished product, the manufacturing processes as required in paragraph 
(a)(4)(i) of this section or the name of the foreign country required by 
Customs, for example:

``Made in (foreign country)''

    (b) For the purpose of determining whether a product should be 
marked under paragraphs (a) (2), (3), or (4) of this section, a 
manufacturer needs to consider the origin of only those materials that 
are covered under the Act and that are one step removed from that 
manufacturing process. For example, a yarn manufacturer must identify 
fiber if it is imported, a cloth manufacturer must identify imported 
yarn and a household product manufacturer must identify imported cloth 
or imported yarn for household products made directly from yarn, or 
imported fiber used as filling for warmth.
    (c) The term country means the political entity known as a nation. 
Except for the United States, colonies, possessions or protectorates 
outside the boundaries of the mother country shall be considered 
separate countries, and the name thereof shall be deemed acceptable in 
designating the country where the textile fiber product was processed or 
manufactured unless the Commission shall otherwise direct.
    (d) The country where the imported textile fiber product was 
principally made shall be considered to be the country where such 
textile fiber product was processed or manufactured. Further work or 
material added to the textile fiber product in another country must 
effect a basic change in form in order to render such other country the 
place where such textile fiber product was processed or manufactured.
    (e) The English name of the country where the imported textile fiber 
product was processed or manufactured shall be used. The adjectival form 
of the name of the country will be accepted as the name of the country 
where the textile fiber product was processed or manufactured, provided 
the adjectival form of the name does not appear with such other words so 
as to refer to a kind or species of product. Variant spellings which 
clearly indicate the English name of the country, such as Brasil for 
Brazil and Italie for Italy, are acceptable. Abbreviations which 
unmistakably indicate the name of a country, such as ``Gt. Britain'' for 
``Great Britain,'' are acceptable.
    (f) Nothing in this rule shall be construed as limiting in any way 
the information required to be disclosed on labels under the provisions 
of any Tariff Act of the United States or regulations prescribed by the 
Secretary of the Treasury.

[24 FR 4480, June 2, 1959, as amended at 50 FR 15107, Apr. 17, 1985; 63 
FR 7521, Feb. 13, 1998; 65 FR 75158, Dec. 1, 2000]



Sec. 303.34  Country of origin in mail order advertising.

    When a textile fiber product is advertised in any mail order catalog 
or mail order promotional material, the description of such product 
shall contain a clear and conspicuous statement that the product was 
either made in U.S.A., imported, or both. Other words or phrases with 
the same meaning may be used. The statement of origin required by this 
section shall not be inconsistent with the origin labeling of the 
product being advertised.

[50 FR 15107, Apr. 17, 1985]



Sec. 303.35  Use of terms ``virgin'' or ``new.''

    The terms virgin or new as descriptive of a textile fiber product, 
or any fiber or part thereof, shall not be used when the product or part 
so described is not composed wholly of new or virgin fiber which has 
never been reclaimed from any spun, woven, knitted, felted, bonded, or 
similarly manufactured product.



Sec. 303.36  Form of separate guaranty.

    (a) The following are suggested forms of separate guaranties under 
section 10 of the Act which may be used by a guarantor residing in the 
United States on or as part of an invoice or other paper relating to the 
marketing or handling of any textile fiber products listed and 
designated therein, and showing the date of such invoice or other paper 
and the signature and address of the guarantor.

[[Page 237]]

    (1) General form. We guarantee that the textile fiber products 
specified herein are not misbranded nor falsely nor deceptively 
advertised or invoiced under the provisions of the Textile Fiber 
Products Identification Act and rules and regulations thereunder.
    (2) Guaranty based on guaranty. Based upon a guaranty received, we 
guarantee that the textile fiber products specified herein are not 
misbranded nor falsely nor deceptively advertised or invoiced under the 
provisions of the Textile Fiber Products Identification Act and rules 
and regulations thereunder.

    Note: The printed name and address on the invoice or other paper 
will suffice to meet the signature and address requirements.

    (b) The mere disclosure of required information including the fiber 
content of a textile fiber product on a label or on an invoice or other 
paper relating to its marketing or handling shall not be considered a 
form of separate guaranty.



Sec. 303.37  Form of continuing guaranty from seller to buyer.

    Under section 10 of the Act, a seller residing in the United States 
may give a buyer a continuing guaranty to be applicable to all textile 
fiber products sold or to be sold. The following is the prescribed form 
of continuing guaranty from seller to buyer.

    We, the undersigned, guaranty that all textile fiber products now 
being sold or which may hereafter be sold or delivered to ------ are 
not, and will not be misbranded nor falsely nor deceptively advertised 
or invoiced under the provisions of the Textile Fiber Products 
Identification Act and rules and regulations thereunder. This guaranty 
effective until ------.
    Dated, signed, and certified this ---- day of ----, 19----, at ----
-------- (City), ------ (State or Territory) ---------- (name under 
which business is conducted.)
    Under penalty of perjury, I certify that the information supplied in 
this form is true and correct.
________________________________________________________________________
Signature of Proprietor, Principal Partner, or Corporate Official
________________________________________________________________________
Name (Print or Type) Title

[48 FR 12518, Mar. 25, 1983]



Sec. 303.38  Continuing guaranty filed with Federal Trade Commission.

    (a)(1) Under section 10 of the act any person residing in the United 
States and marketing or handling textile fiber products may file a 
continuing guaranty with the Federal Trade Commission. When filed with 
the Commission a continuing guaranty shall be fully executed in 
duplicate. Forms for use in preparing continuing guaranties will be 
supplied by the Commission upon request.
    (2) Continuing guaranties filed with the Commission shall continue 
in effect until revoked. The guarantor shall promptly report any change 
in business status to the Commission.
    (b) Prescribed form for a continuing guaranty:

[[Page 238]]

[GRAPHIC] [TIFF OMITTED] TR29DE98.001

    (c) Any person who has a continuing guaranty on file with the 
Commission may, during the effective dates of the guaranty, give notice 
of such fact by setting forth on the invoice or other paper covering the 
marketing or handling of the product guaranteed the following:


[[Page 239]]


    Continuing guaranty under the Textile Fiber Products Identification 
Act filed with the Federal Trade Commission.

    (d) Any person who falsely represents in writing that he has a 
continuing guaranty on file with the Federal Trade Commission when such 
is not a fact shall be deemed to have furnished a false guaranty under 
section 10(b) of the Act.

[24 FR 4486, June 2, 1959, as amended at 48 FR 12517, Mar. 25, 1983; 63 
FR 7521, Feb. 18, 1998; 63 FR 71585, Dec. 28, 1998]



Sec. 303.39  Maintenance of records.

    (a) Pursuant to the provisions of section 6 of the Act, every 
manufacturer of a textile fiber product subject to the Act, irrespective 
of whether any guaranty has been given or received, shall maintain 
records showing the information required by the Act and Regulations with 
respect to all such textile fiber products made by such manufacturer. 
Such records shall show:
    (1) The generic names and percentages by weight of the constituent 
fibers present in the textile fiber product, exclusive of permissive 
ornamentation, in amounts of five per centum or more.
    (2) The name, provided for in Sec. 303.19, or registered 
identification number issued by the Commission, of the manufacturer or 
of one or more persons marketing or handling the textile fiber product.
    (3) The name of the country where such product was processed or 
manufactured as provided for in Sec. 303.33.

The purpose of the records is to permit a determination that the 
requirements of the Act and Regulations have been met and to establish a 
traceable line of continuity from raw material through processing to 
finished product.
    (b) Any person substituting a stamp, tag, label, or other 
identification pursuant to section 5(b) of the Act shall keep such 
records as will show the information set forth on the stamp, tag, label, 
or other identification that he removed and the name or names of the 
person or persons from whom such textile fiber product was received.
    (c) The records required to be maintained pursuant to the provisions 
of this rule shall be preserved for at least three years.

[24 FR 4480, June 2, 1959, as amended at 53 FR 31315, Aug. 18, 1988]



Sec. 303.40  Use of terms in written advertisements that imply presence 
of a fiber.

    The use of terms in written advertisements, including advertisements 
disseminated through the Internet and similar electronic media, that are 
descriptive of a method of manufacture, construction, or weave, and that 
by custom and usage are also indicative of a textile fiber or fibers, or 
the use of terms in such advertisements that constitute or connote the 
name or presence of a fiber or fibers, shall be deemed to be an 
implication of fiber content under section 4(c) of the Act, except that 
the provisions of this section shall not be applicable to non-deceptive 
shelf or display signs in retail stores indicating the location of 
textile fiber products and not intended as advertisements.

[63 FR 7523, Feb. 13, 1998]



Sec. 303.41  Use of fiber trademarks and generic names in advertising.

    (a) In advertising textile fiber products, the use of a fiber 
trademark shall require a full disclosure of the fiber content 
information required by the Act and regulations in at least one instance 
in the advertisement.
    (b) Where a fiber trademark is used in advertising textile fiber 
products containing more than one fiber, other than permissible 
ornamentation, such fiber trademark and the generic name of the fiber 
must appear in the required fiber content information in immediate 
proximity and conjunction with each other in plainly legible type or 
lettering of equal size and conspicuousness.
    (c) Where a fiber trademark is used in advertising textile fiber 
products containing only one fiber, other than permissive ornamentation, 
such fiber trademark and the generic name of the fiber must appear in 
immediate proximity and conjunction with each other in plainly legible 
and conspicuous type or lettering at least once in the advertisement.

[[Page 240]]

    (d) Where a fiber trademark or generic name is used in non-required 
information in advertising, such fiber trademark or generic name, shall 
not be used in such a manner as to be false, deceptive, or misleading as 
to fiber content, or to indicate, directly or indirectly, that a textile 
fiber product is composed wholly or in part of a particular fiber, when 
such is not the case.



Sec. 303.42  Arrangement of information in advertising textile fiber 
products.

    (a) Where a textile fiber product is advertised in such manner as to 
require disclosure of the information required by the Act and 
regulations, all parts of the required information shall be stated in 
immediate conjunction with each other in legible and conspicuous type or 
lettering of equal size and prominence. In making the required 
disclosure of the fiber content of the product, the generic names of 
fibers present in an amount 5 percent or more of the total fiber weight 
of the product, together with any fibers disclosed in accordance with 
Sec. 303.3(a), shall appear in order of predominance by weight, to be 
followed by the designation ``other fiber'' or ``other fibers'' if a 
fiber or fibers required to be so designated are present.
    (b) Non-required information or representations shall in no way be 
false, deceptive, or misleading as to fiber content and shall not 
include any names, terms, or representations prohibited by the Act and 
regulations. Such non-required information or representations shall not 
be set forth or so used as to interfere with, minimize, or detract from 
the required information.
    (c) Non-deceptive terms which are properly and truthfully 
descriptive of a fiber may be used in conjunction with the generic name 
of such fiber; as for example: ``cross-linked rayon,'' ``solution dyed 
acetate,'' ``combed cotton,'' ``nylon 66,'' etc.

[24 FR 4480, June 2, 1959, as amended at 30 FR 14254, Nov. 13, 1965; 30 
FR 15313, Dec. 11, 1965; 63 FR 7523, Feb. 13, 1998]



Sec. 303.43  Fiber content tolerances.

    (a) A textile fiber product which contains more than one fiber shall 
not be deemed to be misbranded as to fiber content percentages if the 
percentages by weight of any fibers present in the total fiber content 
of the product, exclusive of permissive ornamentation, do not deviate or 
vary from the percentages stated on the label in excess of 3 percent of 
the total fiber weight of the product. For example, where the label 
indicates that a particular fiber is present in the amount of 40 
percent, the amount of such fiber present may vary from a minimum of 37 
percent of the total fiber weight of such product to a maximum of 43 
percent of the total fiber weight of such product.
    (b) Where the percentage of any fiber or fibers contained in a 
textile fiber product deviates or varies from the percentage stated on 
the label by more than the tolerance or variation provided in paragraph 
(a) of this section, such product shall be misbranded unless the person 
charged proves that the entire deviation or variation from the fiber 
content percentages stated on the label resulted from unavoidable 
variations in manufacture and despite the exercise of due care.
    (c) Where representations are made to the effect that a textile 
fiber product is composed wholly of one fiber, the tolerance provided in 
section 4(b)(2) of the Act and paragraph (a) of this section shall not 
apply, except as to permissive ornamentation where the textile fiber 
product is represented to be composed of one fiber ``exclusive of 
ornamentation.''



Sec. 303.44  Products not intended for uses subject to the act.

    Textile fiber products intended for uses not within the scope of the 
Act and regulations or intended for uses in other textile fiber products 
which are exempted or excluded from the Act shall not be subject to the 
labeling and invoicing requirements of the Act and regulations: 
Provided, An invoice or other paper covering the marketing or handling 
of such products is given, which indicates that the products are not 
intended for uses subject to the Textile Fiber Products Identification 
Act.

[[Page 241]]



Sec. 303.45  Exclusions from the act.

    (a) Pursuant to section 12(b) of the Act, the Commission hereby 
excludes from the operation of the Act:
    (1) All textile fiber products except:
    (i) Articles of wearing apparel:
    (ii) Handkerchiefs;
    (iii) Scarfs;
    (iv) Beddings;
    (v) Curtains and casements;
    (vi) Draperies;
    (vii) Tablecloths, napkins, and doilies;
    (viii) Floor coverings;
    (ix) Towels;
    (x) Wash cloths and dish cloths;
    (xi) Ironing board covers and pads;
    (xii) Umbrellas and parasols;
    (xiii) Batts;
    (xiv) Products subject to section 4(h) of the Act;
    (xv) Flags with heading or more than 216 square inches (13.9 dm\2\) 
in size;
    (xvi) Cushions;
    (xvii) All fibers, yarns and fabrics (including narrow fabrics 
except packaging ribbons);
    (xviii) Furniture slip covers and other covers or coverlets for 
furniture;
    (xix) Afghans and throws;
    (xx) Sleeping bags;
    (xxi) Antimacassars and tidies;
    (xxii) Hammocks;
    (xxiii) Dresser and other furniture scarfs.
    (2) Belts, suspenders, arm bands, permanently knotted neckties, 
garters, sanitary belts, diaper liners, labels (either required or non-
required) individually and in rolls, looper clips intended for 
handicraft purposes, book cloth, artists' canvases, tapestry cloth, and 
shoe laces.
    (3) All textile fiber products manufactured by the operators of 
company stores and offered for sale and sold exclusively to their own 
employees as ultimate consumers.
    (4) Coated fabrics and those portions of textile fiber products made 
of coated fabrics.
    (5) Secondhand household textile articles which are discernibly 
secondhand or which are marked to indicate their secondhand character.
    (6) Non-woven products of a disposable nature intended for one-time 
use only.
    (7) All curtains, casements, draperies, and table place mats, or any 
portions thereof otherwise subject to the Act, made principally of 
slats, rods, or strips, composed of wood, metal, plastic, or leather.
    (8) All textile fiber products in a form ready for the ultimate 
consumer procured by the military services of the United States which 
are bought according to specifications, but shall not include those 
textile fiber products sold and distributed through post exchanges, 
sales commissaries, or ship stores; provided, however, that if the 
military services sell textile fiber products for nongovernmental 
purposes the information with respect to the fiber content of such 
products shall be furnished to the purchaser thereof who shall label 
such products in conformity with the Act and regulations before such 
products are distributed for civilian use.
    (9) All hand woven rugs made by Navajo Indians which have attached 
thereto the ``Certificate of Genuineness'' supplied by the Indian Arts 
and Crafts Board of the United States Department of Interior. The term 
Navajo Indian means any Indian who is listed on the register of the 
Navajo Indian Tribe or is eligible for listing thereon.
    (b) The exclusions provided for in paragraph (a) of this section 
shall not be applicable (1) if any representations as to the fiber 
content of such products are made on any label or in any advertisement 
without making a full and complete fiber content disclosure on such 
label or in such advertisement in accordance with the Act and 
regulations with the exception of those products excluded by paragraph 
(a)(6) of this section, or (2) if any false, deceptive, or misleading 
representations are made as to the fiber content of such products.
    (c) The exclusions from the Act provided in paragraph (a) of this 
section are in addition to the exemptions from the Act provided in 
section 12(a) of the Act and shall not affect or limit such exemptions.

(Sec. 12, 72 Stat. 1723; 15 U.S.C. 70j)

[24 FR 4480, June 2, 1959, as amended at 25 FR 4318, May 14, 1960; 25 FR 
7044, July 26, 1960; 29 FR 48, Jan. 3, 1964; 61 FR 11544, Mar. 21, 1996]

[[Page 242]]



PART 304_RULES AND REGULATIONS UNDER THE HOBBY PROTECTION ACT--Table 
of Contents




Sec.
304.1 Terms defined.
304.2 General requirement.
304.3 Applicability.
304.4 Application of other law or regulation.
304.5 Marking requirements for imitation political items.
304.6 Marking requirements for imitation numismatic items.

    Authority: 15 U.S.C. 2101 et seq.

    Source: 40 FR 5496, Feb. 6, 1975, unless otherwise noted.



Sec. 304.1  Terms defined.

    (a) Act means the Hobby Protection Act (approved November 29, 1973; 
Pub. L. 93-167, 87 Stat. 686, (15 U.S.C. 2101 et seq.)).
    (b) Commerce has the same meanings as such term has under the 
Federal Trade Commission Act.
    (c) Commission means the Federal Trade Commission.
    (d) Imitation numismatic item means 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. Such 
term includes an original numismatic item which has been altered or 
modified in such a manner that it could reasonably purport to be an 
original numismatic item other than the one which was altered or 
modified. The term shall not include any re-issue or re-strike of any 
original numismatic item by the United States or any foreign government.
    (e) Imitation political item means 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 item.
    (f) Original numismatic item means anything which has been a part of 
a coinage or issue which has been used in exchange or has been used to 
commemorate a person, object, place, or event. Such term includes coins, 
tokens, paper money, and commemorative medals.
    (g) Original political item means any political button, poster, 
literature, sticker, or any advertisement produced for use in any 
political cause.
    (h) Person means any individual, group, association, partnership, or 
any other business entity.
    (i) Regulations means any or all regulations prescribed by the 
Federal Trade Commission pursuant to the Act.
    (j) United States means the States, the District of Columbia, and 
the Commonwealth of Puerto Rico.
    (k) Diameter of a reproduction means the length of the longest 
possible straight line connecting two points on the perimeter of the 
reproduction.

[40 FR 5496, Feb. 6, 1975, as amended at 53 FR 38942, Oct. 4, 1988]



Sec. 304.2  General requirement.

    Imitation political or numismatic items subject to the Act shall be 
marked in conformity with the requirements of the Act and the 
regulations promulgated thereunder. Any violation of these regulations 
shall constitute a violation of the Act and of the Federal Trade 
Commission Act.



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.



Sec. 304.4  Application of other law or regulation.

    The provisions of these regulations are in addition to, and not in 
substitution for or limitation of, the provisions of any other law or 
regulation of the United States (including the existing statutes and 
regulations prohibiting the reproduction of genuine currency) or of the 
law or regulation of any State.



Sec. 304.5  Marking requirements for imitation political items.

    (a) An imitation political item which is manufactured in the United 
States, or imported into the United States for introduction into or 
distribution in commerce, shall be plainly and permanently marked with 
the calendar year in which such item was manufactured.

[[Page 243]]

    (b) The calendar year shall be marked upon the item legibly, 
conspicuously and nondeceptively, and in accordance with the further 
requirements of these regulations.
    (1) The calendar year shall appear in arabic numerals, shall be 
based upon the Gregorian calendar and shall consist of four digits.
    (2) The calendar year shall be marked on either the obverse or the 
reverse surface of the item. It shall not be marked on the edge of the 
item.
    (3) An imitation political item of incusable material shall be 
incused with the calendar year in sans-serif numerals. Each numeral 
shall have a vertical dimension of not less than two millimeters (2.0 
mm) and a minimum depth of three-tenths of one millimeter (0.3 mm) or 
one-half (\1/2\) the thickness of the reproduction, whichever is the 
lesser. The minimum total horizontal dimension for the four numerals 
composing the calendar year shall be six millimeters (6.0 mm).
    (4) An imitation political button, poster, literature, sticker, or 
advertisement composed of nonincusable material shall be imprinted with 
the calendar year in sans-serif numerals. Each numeral shall have a 
vertical dimension of not less than two millimeters (2.0 mm). The 
minimum total horizontal dimension of the four numerals composing the 
calendar year shall be six millimeters (6.0 mm).



Sec. 304.6  Marking requirements for imitation numismatic items.

    (a) An imitation numismatic item which is manufactured in the United 
States, or imported into the United States for introduction into or 
distribution in commerce, shall be plainly and permanently marked 
``COPY''.
    (b) The word ``COPY'' shall be marked upon the item legibly, 
conspicuously, and nondeceptively, and in accordance with the further 
requirements of these regulations.
    (1) The word ``COPY'' shall appear in capital letters, in the 
English language.
    (2) The word ``COPY'' shall be marked on either the obverse or the 
reverse surface of the item. It shall not be marked on the edge of the 
item.
    (3) An imitation numismatic item of incusable material shall be 
incused with the word ``COPY'' in sans-serif letters having a vertical 
dimension of not less than two millimeters (2.0 mm) or not less than 
one-sixth of the diameter of the reproduction, and a minimum depth of 
three-tenths of one millimeter (0.3 mm) or to one-half (\1/2\) the 
thickness of the reproduction, whichever is the lesser. The minimum 
total horizontal dimension of the word ``COPY'' shall be six millimeters 
(6.0 mm) or not less than one-half of the diameter of the reproduction.
    (4) An imitation numismatic item composed of nonincusable material 
shall be imprinted with the word ``COPY'' in sans-serif letters having a 
vertical dimension of not less than two millimeters (2.0 mm) or not less 
than one-sixth of the diameter of the reproduction. The minimum total 
horizontal dimension of the word ``COPY'' shall be six millimeters (6.0 
mm) or not less than one-half of the diameter of the reproduction.

[40 FR 5496, Feb. 6, 1975, as amended at 53 FR 38942, Oct. 4, 1988]



 PART 305_RULE CONCERNING DISCLOSURES REGARDING ENERGY CONSUMPTION 
 
 AND WATER USE OF CERTAIN HOME APPLIANCES AND OTHER PRODUCTS REQUIRED 
 UNDER THE ENERGY POLICY 
AND CONSERVATION ACT (``APPLIANCE LABELING RULE'')--Table of Contents




                                  Scope

Sec.
305.1 Scope of the regulations in this part.

                               Definitions

305.2 Definitions.
305.3 Description of covered products.

                                 General

305.4 Prohibited acts.

                                 Testing

305.5 Determinations of estimated annual energy consumption, estimated 
          annual operating cost, and energy efficiency rating, and of 
          water use rate.
305.6 Sampling.
305.7 Determinations of capacity.
305.8 Submission of data.

[[Page 244]]

                Representative Average Unit Energy Costs

305.9 Representative average unit energy costs.
305.10 Ranges of estimated annual energy consumption and energy 
          efficiency ratings.

                          Required Disclosures

305.11 Labeling for covered products.
305.12 Additional information relating to energy consumption.
305.13 Promotional material displayed or distributed at point of sale.
305.14 Catalogs.

                         Additional Requirements

305.15 Test data records.
305.16 Required testing by designated laboratory.

                           Effect of This Part

305.17 Effect on other law.
305.18 Stayed or invalid parts.
305.19 Exemptions.

Appendix A1 to Part 305--Refrigerators With Automatic Defrost
Appendix A2 to Part 305--Refrigerators and Refrigerator-Freezers With 
          Manual Defrost
Appendix A3 to Part 305--Refrigerator-Freezers With Partial Automatic 
          Defrost
Appendix A4 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Top-Mounted Freezer Without Through-the-Door Ice Service
Appendix A5 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Side-Mounted Freezer Without Through-the-Door Ice Service
Appendix A6 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Bottom-Mounted Freezer Without Through-the-Door Ice 
          Service
Appendix A7 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Top-Mounted Freezer With Through-the-Door Ice Service
Appendix A8 to Part 305--Refrigerator-Freezers With Automatic Defrost 
          With Side-Mounted Freezer With Through-the-Door Ice Service
Appendix B1 to Part 305--Upright Freezers With Manual Defrost
Appendix B2 to Part 305--Upright Freezers With Automatic Defrost
Appendix B3 to Part 305--Chest Freezers and All Other Freezers
Appendix C1 to Part 305--Compact Dishwashers
Appendix C2 to Part 305--Standard Dishwashers
Appendix D1 to Part 305--Water Heaters--Gas
Appendix D2 to Part 305--Water Heaters--Electric
Appendix D3 to Part 305--Water Heaters--Oil
Appendix D4 to Part 305--Water Heaters--Instantaneous--Gas
Appendix D5 to Part 305--Water Heaters--Heat Pump
Appendix E to Part 305--Room Air Conditioners
Appendix F1 to Part 305--Standard Clothes Washers
Appendix F2 to Part 305--Compact Clothes Washers
Appendix G1 to Part 305--Furnaces--Gas
Appendix G2 to Part 305--Furnaces--Electric
Appendix G3 to Part 305--Furnaces--Oil
Appendix G4 to Part 305--Mobil Home Furnaces
Appendix G5 to Part 305--Boilers--Gas (Except Steam)
Appendix G6 to Part 305--Boilers--Gas (Steam)
Appendix G7 to Part 305--Boilers--Oil
Appendix G8 to Part 305--Boilers--Electric
Appendix H to Part 305--Cooling Performance and Cost for Central Air 
          Conditioners
Appendix I to Part 305--Heating Performance and Cost for Central Air 
          Conditioners
Appendix J1 to Part 305--Pool Heaters--Gas
Appendix J2 to Part 305--Pool Heaters--Oil
Appendix K to Part 305--Suggested Data Reporting Format
Appendix L to Part 305--Sample Labels

    Authority: 42 U.S.C. 6294.

    Source: 52 FR 46894, Dec. 10, 1987, unless otherwise noted.

                                  Scope



Sec. 305.1  Scope of the regulations in this part.

    The rule in this part establishes requirements for consumer 
appliance products, as hereinafter described, in commerce, as 
``commerce'' is defined in the Energy Policy and Conservation Act, 42 
U.S.C. 6291, with respect to:
    (a) Labeling and/or marking the products with information required 
by this part indicating their operating cost (or different useful 
measure of energy consumption) and related information, disclosing their 
water use rate and related information, or stating their compliance with 
applicable standards under section 325 of the Energy Policy and 
Conservation Act, 42 U.S.C. 6295;

[[Page 245]]

    (b) Including in printed matter displayed or distributed at the 
point of sale of such products, or including in any catalog from which 
the products may be purchased, information concerning their water use or 
their energy consumption;
    (c) Including on the labels, separately attaching to the products, 
or shipping with the products, additional information relating to energy 
consumption, energy efficiency, or energy cost; and
    (d) Making representations, in writing or in broadcast advertising, 
respecting the water use, energy consumption, or energy efficiency of 
the products, or the cost of water used or energy consumed by the 
products.

[52 FR 46894, Dec. 10, 1987, as amended at 54 FR 28034, July 5, 1989]

                               Definitions



Sec. 305.2  Definitions.

    (a) Act means the Energy Policy and Conservation Act (Pub. L. 94-
163), and amendments thereto.
    (b) Commission means the Federal Trade Commission.
    (c) Manufacturer means any person who manufactures, produces, 
assembles, or imports a consumer appliance product. Assembly operations 
which are solely decorative are not included.
    (d) Retailer means a person to whom a consumer appliance product is 
delivered or sold, if such delivery or sale is for purposes of sale or 
distribution in commerce to purchasers who buy such product for purposes 
other than resale. The term retailer includes purchasers of appliances 
who install such appliances in newly constructed or newly rehabilitated 
housing, or mobile homes, with the intent to sell the covered appliances 
as part of the sale of such housing or mobile homes.
    (e) Distributor means a person (other than a manufacturer or 
retailer) to whom a consumer appliance product is delivered or sold for 
purposes of distribution in commerce.
    (f) Private labeler means an owner of a brand or trademark on the 
label of a consumer appliance product which bears a private label.
    (g) Range of comparability means a group of models within a class of 
covered products, each model of which satisfies approximately the same 
consumer needs.
    (h) Estimated annual energy consumption and estimated annual 
operating cost--(1) Estimated annual energy consumption means the energy 
or (for products described in sections 305.3(n)-(q)) water that is 
likely to be consumed annually in representative use of a consumer 
product, as determined in accordance with tests prescribed under section 
323 of the Act (42 U.S.C. 6293).
    (i) Kilowatt-hour use per year, or kWh/yr., means estimated annual 
energy consumption expressed in kilowatt-hours of electricity.
    (ii) Therm use per year, or therms/yr., means estimated annual 
energy consumption expressed in therms of natural gas.
    (iii) Gallon use per year, or gallons/yr., means estimated annual 
energy consumption expressed in gallons of propane or No. 2 heating oil.
    (2) Estimated annual operating cost means the aggregate retail cost 
of the energy that is likely to be consumed annually in representative 
use of a consumer product, as determined in accordance with tests 
prescribed under section 323 of the Act (42 U.S.C. 6293).
    (i) Energy efficiency rating means the following product-specific 
energy usage descriptors: annual fuel utilization efficiency (AFUE) for 
furnaces; energy efficiency ratio (EER) for room air conditioners; 
seasonal energy efficiency ratio (SEER) for the cooling function of 
central air conditioners and heat pumps; heating seasonal performance 
factor (HSPF) for the heating function of heat pumps; and, thermal 
efficiency (TE) for pool heaters, as these descriptors are determined in 
accordance with tests prescribed under section 323 of the Act (42 U.S.C. 
6293). These product-specific energy usage descriptors shall be used in 
satisfying all the requirements of this part.
    (j) Range of estimated annual energy consumption means the range of 
estimated annual energy consumption per year of all models within a 
designated range of comparability.
    (k) Range of energy efficiency ratings means the range of energy 
efficiency ratings for all models within a designated range of 
comparability.

[[Page 246]]

    (l) New covered product, as used in Sec. 305.4, means a covered 
product the title of which has not passed to a purchaser who buys the 
product for purposes other than resale or leasing for a period in excess 
of one year.
    (m) Catalog means printed material which contains the terms of sale, 
retail price, and instructions for ordering, from which a retail 
consumer can order a covered product.
    (n) Consumer product means any article (other than an automobile, as 
``automobile'' is defined in 15 U.S.C. 2001(1) [sec. 501(1) of the Motor 
Vehicle Information and Cost Savings Act]) of a type--
    (1) which in operation consumes, or is designed to consume, energy 
or, with respect to showerheads, faucets, water closets, and urinals, 
water; and
    (2) which, to any significant extent, is distributed in commerce for 
personal use or consumption by individuals;

without regard to whether such article or such type is in fact 
distributed in commerce for personal use or consumption by an 
individual, except that such term includes fluorescent lamp ballasts, 
general service fluorescent lamps, medium base compact fluorescent 
lamps, general service incandescent lamps (including incandescent 
reflector lamps), showerheads, faucets, water closets, and urinals 
distributed in commerce for personal or commercial use or consumption.
    (o) Consumer appliance product means any of the following consumer 
products, excluding those products designed solely for use in 
recreational vehicles and other mobile equipment:
    (1) Refrigerators, refrigerator-freezers, and freezers which can be 
operated by alternating current electricity, excluding--
    (i) any type designed to be used without doors; and
    (ii) any type which does not include a compressor and condenser unit 
as an integral part of the cabinet assembly.
    (2) Dishwashers.
    (3) Water heaters.
    (4) Room air conditioners.
    (5) Clothes washers.
    (6) Clothes dryers.
    (7) Central air conditioners and central air conditioning heat 
pumps.
    (8) Furnaces.
    (9) Direct heating equipment.
    (10) Pool heaters.
    (11) Kitchen ranges and ovens.
    (12) Television sets.
    (13) Fluorescent lamp ballasts.
    (14) General service fluorescent lamps.
    (15) Medium base compact fluorescent lamps.
    (16) General service incandescent lamps, including incandescent 
reflector lamps.
    (17) Showerheads.
    (18) Faucets.
    (19) Water closets.
    (20) Urinals.
    (21) Any other type of consumer product which the Department of 
Energy classifies as a covered product under section 322(b) of the Act 
(42 U.S.C. 6292).
    (p) Covered product means any consumer product or consumer appliance 
product described in Sec. 305.3 of this part.
    (q) Luminaire means a complete lighting unit consisting of a 
fluorescent lamp or lamps, together with parts designed to distribute 
the light, to position and protect such lamps, and to connect such lamps 
to the power supply through the ballast.
    (r) Ballast efficacy factor means the relative light output divided 
by the power input of a fluorescent lamp ballast, as measured under test 
conditions specified in American National Standards Institute (``ANSI'') 
standard C82.2-1984, or as may be prescribed by the Secretary of Energy. 
Copies of ANSI standard C82.2-1984 may be obtained from the American 
National Standards Institute, 11 West 42nd St., New York, NY 10036.
    (s) Bulb shape means the shape of the lamp, especially the glass 
portion.
    (t) Base for lamps means the portion of the lamp which screws into 
the socket.
    (u) Color rendering index or CRI for lamps means the measure of the 
degree of color shift objects undergo when illuminated by a light source 
as compared with the color of those same objects when illuminated by a 
reference source of comparable color temperature.
    (v) Correlated color temperature for lamps means the absolute 
temperature of a blackbody whose chromaticity

[[Page 247]]

most nearly resembles that of the light source.
    (w) Lamp type means all lamps designated as having the same 
electrical and lighting characteristics and made by one manufacturer.
    (x) Wattage for lamps means the total electrical power consumed by a 
lamp in watts, after an initial seasoning period and including, for 
fluorescent lamps, arc watts plus cathode watts.
    (y) Light output for lamps means the total luminous flux (power) of 
a lamp in lumens.
    (z) Life and lifetime for lamps mean length of operating time of a 
statistically large group of lamps between first use and failure of 50 
percent of the group.
    (aa) Lamp efficacy means the light output of a lamp divided by its 
wattage, expressed in lumens per watt (LPW).
    (bb) Average lamp efficacy means the lamp efficacy readings taken 
over a statistically significant period of manufacture with the readings 
averaged over that period.
    (cc) IES means the Illuminating Engineering Society of North America 
and, as used herein, is the prefix for test procedures adopted by IES.
    (dd) ASME means the American Society of Mechanical Engineers and, as 
used herein, is the prefix for national standards and codes adopted by 
ASME.
    (ee) ANSI means the American National Standards Institute and, as 
used herein, is the prefix for national standards and codes adopted by 
ANSI.
    (ff) Water use means the quantity of water flowing through a 
showerhead, faucet, water closet, or urinal at point of use, determined 
in accordance with test procedures under section 323 of the Act, 42 
U.S.C. 6293.
    (gg) Flushometer valve means a valve attached to a pressured water 
supply pipe and so designed that, when actuated, it opens the line for 
direct flow into the fixture at a rate and quantity to operate properly 
the fixture, and then gradually closes to provide trap reseal in the 
fixture in order to avoid water hammer. The pipe to which this device is 
connected is in itself of sufficient size that, when opened, will allow 
the device to deliver water at a sufficient rate of flow for flushing 
purposes.
    (hh) Flow restricting or controlling spout end device means an 
aerator used in a faucet.

[52 FR 46894, Dec. 10, 1987, as amended at 59 FR 34031, July 1, 1994; 59 
FR 49563, Sept. 28, 1994; 59 FR 67524, Dec. 29, 1994]



Sec. 305.3  Description of covered products.

    (a) Refrigerators and refrigerator-freezers. (1) Electric 
refrigerator means a cabinet designed for the refrigerated storage of 
food at temperatures above 32 [deg]F., and having a source of 
refrigeration requiring single phase, alternating current electric 
energy input only. An electric refrigerator may include a compartment 
for the freezing and storage of food at temperatures below 32 [deg]F., 
but does not provide a separate low temperature compartment designed for 
the freezing and storage of food at temperatures below 8 [deg]F. An 
``all-refrigerator'' is an electric refrigerator which does not include 
a compartment for the freezing and long time storage of food at 
temperatures below 32 [deg]F (0.0 [deg]C). An ``all-refrigerator'' may 
include a compartment of 0.50 cubic capacity (14.2 liters) or less for 
the freezing and storage of ice.
    (2) Electric refrigerator-freezer means a cabinet which consists of 
two or more compartments with at least one of the compartments designed 
for the refrigerated storage of food at temperatures above 32 [deg]F. 
and with at least one of the compartments designed for the freezing and 
storage of food at temperatures below 8 [deg]F. which may be adjusted by 
the user to a temperature of 0 [deg]F. or below. The source of 
refrigeration requires single phase, alternating current electric energy 
input only.
    (b) Freezer means a cabinet designed as a unit for the freezing and 
storage of food at temperatures of 0 [deg]F. or below, and having a 
source of refrigeration requiring single phase, alternating current 
electric energy input only.
    (c) Dishwasher means a cabinetlike appliance which, with the aid of 
water and detergent, washes, rinses, and dries (when a drying process is 
included) dishware, glassware, eating utensils and most cooking utensils 
by chemical, mechanical, and/or electrical means and discharges to the 
plumbing drainage system.

[[Page 248]]

    (1) Water Heating Dishwasher means a dishwasher which is designed 
for heating cold inlet water (nominal 50 [deg]F.) or a dishwasher for 
which the manufacturer recommends operation with a nominal inlet water 
temperature of 120 [deg]F. and may operate at either of these inlet 
water temperatures by providing internal water heating to above 120 
[deg]F. in at least one wash phase of the normal cycle.
    (2) [Reserved]
    (d)(1) Water heater means a product which utilizes oil, gas, or 
electricity to heat potable water for use outside the heater upon 
demand, including--
    (i) Storage type units which heat and store water at a 
thermostatically controlled temperature, including gas storage water 
heaters with an input of 75,000 Btu per hour or less, oil storage water 
heaters with an input of 105,000 Btu per hour or less, and electric 
storage water heaters with an input of 12 kilowatts or less;
    (ii) Instantaneous type units which heat water but contain no more 
than one gallon of water per 4,000 Btu per hour of input, including gas 
instantaneous water heaters with an input of 200,000 Btu per hour or 
less, oil instantaneous water heaters with an input of 210,000 Btu per 
hour or less, and electric instantaneous water heaters with an input of 
12 kilowatts or less; and
    (iii) Heat pump type units, with a maximum current rating of 24 
amperes at a voltage no greater than 250 volts, which are products 
designed to transfer thermal energy from one temperature level to a 
higher temperature level for the purpose of heating water, including all 
ancillary equipment such as fans, storage tanks, pumps, or controls 
necessary for the device to perform its function.
    (2) The requirements of this part are limited to those water heaters 
for which the Department of Energy has adopted and published test 
procedures for measuring energy usage.
    (e) Room air conditioner means a consumer product, other than a 
packaged terminal air conditioner, which is powered by a single phase 
electric current and which is an encased assembly designed as a unit for 
mounting in a window or through the wall for the purpose of providing 
delivery of conditioned air to an enclosed space. It includes a prime 
source of refrigeration and may include a means for ventilating and 
heating.
    (f) Clothes washer means a consumer product designed to clean 
clothes, utilizing a water solution of soap and/or detergent and 
mechanical agitation or other movement, and must be one of the following 
classes: automatic clothes washers, semi-automatic clothes washers, and 
other clothes washers.
    (1) Automatic clothes washer means a class of clothes washer which 
has a control system capable of scheduling a pre-selected combination of 
operations, such as regulation of water fill level, and performance of 
wash, rinse, drain and spin functions, without the need for the user to 
intervene subsequent to the initiation of machine operation. Some models 
may require user intervention to initiate these different segments of 
the cycle after the machine has begun operation, but they do not require 
the user to intervene to regulate the water temperature by adjusting the 
external water faucet valves.
    (2) Semi-automatic clothes washer means a class of clothes washer 
that is the same as an automatic clothes washer except that the user 
must intervene to regulate the water temperature by adjusting the 
external water faucet valves.
    (3) Other clothes washer means a class of clothes washer which is 
not an automatic or semi-automatic clothes washer.
    (g) Furnaces. (1) Furnace means a product which utilizes only 
single-phase electric current, or single-phase electric current or DC 
current in conjunction with natural gas, propane, or home heating oil, 
and which--
    (i) Is designed to be the principal heating sources for the living 
space of a residence;
    (ii) Is not contained within the same cabinet with a central air 
conditioner whose rated cooling capacity is above 65,000 Btu per hour;
    (iii) Is an electric central furnace, electric boiler, forced-air 
central furnace, gravity central furnace, or low pressure steam or hot 
water boiler; and
    (iv) Has a heat input rate of less than 300,000 Btu per hour for 
electric boilers

[[Page 249]]

and low pressure steam or hot water boilers and less than 225,000 Btu 
per hour for forced-air central furnaces, gravity central furnaces, and 
electric central furnaces.
    (2) Electric central furnace means a furnace designed to supply heat 
through a system of ducts with air as the heating medium, in which heat 
is generated by one or more electric resistance heating elements and the 
heated air is circulated by means of a fan or blower.
    (3) Forced air central furnace means a gas or oil burning furnace 
designed to supply heat through a system of ducts with air as the 
heating medium. The heat generated by combustion of gas or oil is 
transferred to the air within a casing by conduction through heat 
exchange surfaces and is circulated through the duct system by means of 
a fan or blower.
    (4) Gravity central furnace means a gas fueled furnace which depends 
primarily on natural convection for circulation of heated air and which 
is designed to be used in conjunction with a system of ducts.
    (5) Electric boiler means an electrically powere