[Federal Register: April 3, 2003 (Volume 68, Number 64)]
[Proposed Rules]
[Page 16231-16237]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ap03-26]
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FEDERAL TRADE COMMISSION
16 CFR 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'')
AGENCY: Federal Trade Commission.
ACTION: Proposed rule and proposed conditional exemption.
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SUMMARY: The Federal Trade Commission (``Commission'') seeks public
comment on a proposed rule change and exemption request submitted by
the Association of Home Appliance Manufacturers (``AHAM'') related to
certain testing and labeling requirements of the Appliance Labeling
Rule for clothes washers.
DATES: Written comments on the proposed exemption and the proposed rule
must be submitted on or before May 5, 2003.
ADDRESSES: Send written comments to Secretary, Federal Trade
Commission, Room H-159, 600 Pennsylvania Ave., NW., Washington, DC
20580. All comments should be captioned ``16 CFR part 305--Appliance
Labeling Rule.'' To encourage prompt and efficient review and
dissemination of the comments to the public, comments should also be
submitted, if possible, in electronic form to: appliance@ftc.gov.
AHAM's request and written public comments will be posted to the extent
possible on the Commission's Web site (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=www.ftc.gov) and will otherwise
be available for public inspection in accordance with the Freedom of
Information Act, 5 U.S.C. 552, and Commission regulations on normal
business days from 8:30 a.m. to 5 p.m. at the Federal Trade Commission,
6th St. and Pennsylvania Ave., NW., Room 130, Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Hampton Newsome, Attorney, Division of
Enforcement, Federal Trade Commission, Washington, DC 20580 (202-326-
2889).
SUPPLEMENTARY INFORMATION:
I. Background
A. FTC Requirements
The Commission issued the Appliance Labeling Rule in 1979, 44 FR
66466 (Nov. 19, 1979) (``Rule''), in response to a directive in the
Energy Policy and Conservation Act of 1975 (``EPCA'') (42 U.S.C. 6294).
EPCA also requires the Department of Energy (``DOE'') to develop test
procedures that measure how much energy certain appliances use, and to
determine the representative average cost a consumer pays for the
different types of energy available.
The Rule covers, among other things, eight categories of major
household appliances: refrigerators and refrigerator-freezers,
freezers, dishwashers, clothes washers, water heaters, room air
conditioners, furnaces, and central air conditioners. The Rule requires
manufacturers of all covered appliances to disclose specific energy
consumption or efficiency information (derived from the DOE test
procedures) at the point of sale in the form of an ``EnergyGuide''
label and in catalogs. The Rule requires manufacturers to include, on
labels, an energy consumption or efficiency figure and a ``range of
comparability.'' This range shows the highest and lowest energy
consumption or efficiencies for all comparable appliance models so
consumers can compare the energy consumption or efficiency of other
models similar to the labeled model.
The Rule requires manufacturers, after filing an initial report, to
report annually the estimated annual energy consumption or energy
efficiency ratings for the appliances derived from tests performed
pursuant to the DOE test procedures. 16 CFR 305.8(b). Because
manufacturers regularly add new models to their lines, improve existing
models, and drop others, the database from which the ranges of
comparability are calculated is constantly changing. Under Sec. 305.10
of the Rule, to keep the required information on labels consistent with
these changes, the Commission publishes new ranges (but not more often
than annually) if an analysis of the new information indicates that the
upper or lower limits of the ranges have changed by more than 15%.
Otherwise, the Commission publishes a statement that the prior ranges
remain in effect for the next year.
B. New DOE Test Procedure and Energy Standards for Clothes Washers
New energy conservation standards and a new DOE test procedure for
clothes washers will become effective on January 1, 2004. The new
energy
[[Page 16232]]
conservation standard requires that all new residential clothes washers
manufactured after January 1, 2004 be 22% more efficient than today's
minimally compliant clothes washer.\1\ Accordingly, the 2004 energy
standard will render a substantial portion of the existing clothes
washer market obsolete.
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\1\ 66 FR 3314, 3315 (Jan. 12, 2001). A second amended energy
efficiency standard, slated to take effect on January 1, 2007,
requires that all new residential clothes washers manufactured after
that date be 35% more efficient than today's minimally compliant
clothes washer.
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The new DOE test procedure for clothes washers, which also will
become effective on January 1, 2004, is found at 10 CFR part 430,
Subpart B, Appendix J1.\2\ Application of the new test procedure
(sometimes referred to as the ``J1'' test or the ``Modified Energy
Factor'' test) will likely produce energy consumption figures different
from those yielded by the old (``J'') test procedure (10 CFR part 430,
subpart B, Appendix J).\3\ Because these test results are used to
determine energy use information that appears on the FTC EnergyGuide
label, consumers may not be able effectively to compare the energy
performance of clothes washers if the labels are based on the two
different test procedures.
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\2\ The EnergyStar program, run by DOE and the U.S.
Environmental Protection Agency, already requires use of the new
(J1) test to certify clothes washers under that program.
\3\ According to AHAM, the clothes washer test procedures were
revised to better reflect current usage habits by incorporating
updated temperature utilization factors that are more appropriate
for today's designs.
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II. AHAM's Request
To ease the transition to the new energy efficiency standard and
new (J1) test procedure, AHAM \4\ wrote to FTC staff on February 7,
2003, requesting permission to begin using that test for labeling
clothes washers during 2003, before the test becomes effective. In
addition, AHAM's letter requests that the Commission allow its members
to provide special wording on the EnergyGuide labels for these models
to help consumers in distinguishing washers tested under the new (J1)
procedure from those tested under the old (J) procedure (see Prototype
Label 2 at the end of this document). AHAM's proposed label would
display a banner across the top stating: ``This Model has been Tested
to the 2004 Test Procedure. Compare only with Models with this
Notice.'' AHAM requested that the Commission allow its members to begin
using the new (J1) test and modified labels on May 1, 2003, and that
the labeling changes be made ``permanent.'' \5\ To grant AHAM's
request, the Commission would have to grant an exemption from certain
EnergyGuide testing and labeling requirements for the remainder of this
year and issue Rule amendments to make the requested labeling changes a
permanent requirement for all manufacturers after January 1, 2004.
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\4\ The manufacturers identified in AHAM's request are Alliance
Laundry Systems, Electrolux Home Products, Fisher & Paykel Ltd., GE
Appliances, Maytag Appliances, Miele Corp., and Whirlpool Corp.
Subsequently, AHAM informed Commission staff that BSH, Gonrenje, and
Asko also are participating in AHAM's request. According to AHAM,
these manufacturers produce roughly 98% of the clothes washers sold
in the United States.
\5\ AHAM also requested that the Commission change the reporting
date in the Rule from March 1 to October 1 for each year. The
Commission has already addressed the requested date change for data
submission in an earlier Federal Register document (see 68 FR 8448
(Feb. 21, 2003)).
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AHAM submitted its request because it asserts that the transition
to clothes washers compliant with the new 2004 energy efficiency
standard and new test procedure, with respect to testing and labeling,
could be unduly burdensome to manufacturers and confusing to consumers.
According to AHAM, there will be hundreds of new energy efficient
models introduced throughout the course of 2003. Under current
requirements, manufacturers will have to test and rate these new models
first under the old (J) procedure for 2003, and then again under the
new (J1) procedure in order to distribute them in 2004. AHAM stated
that, since several samples of each basic model need to be tested to
determine statistically valid ratings, such duplicative testing would
result in tremendous laboratory and manufacturer staff resources for
hundreds of new models. Also, AHAM states that retail floor models are
not changed frequently. Thus, without action by the FTC, retail display
units for new models introduced this year will have energy labels based
on the old (J) test well into 2004 and beyond. AHAM is concerned that
these display units could be very confusing and misleading as consumers
seek to compare units tested under different procedures in a single
showroom without any notice that differences exist.
III. Discussion
AHAM's request raises two procedural matters: (1) A request for an
exemption from certain testing and labeling requirements for clothes
washers from May through December 31, 2003 (to permit testing and
labeling pursuant to the new (J1) test); and (2) a proposed
``permanent'' rule change, effective January 1, 2004, to conform
existing label content and format requirements to label changes
permitted by the 2003 exemption. The Commission is seeking public
comment on both the exemption request and the proposed rule.
A. Proposed Conditional Exemption for 2003
AHAM's request implicates several provisions of the Appliance
Labeling Rule. The Rule requires that, for the purposes of the
EnergyGuide label, manufacturers use the estimated annual energy
consumption as derived from the DOE clothes washer test procedures in
10 CFR part 430 (see 16 CFR 305.5(a) and 305.11(a)(5)(i)(E)). Because
the new (J1) test for clothes washers will not become effective until
January 1, 2004, the Rule does not authorize the use of that test for
energy consumption information on EnergyGuide labels until that date.
By granting the requested exemption, the Commission would allow
manufacturers to begin using the new test results on EnergyGuide labels
before 2004. In addition, the Rule does not allow any marks or
identification other than those specified in the Rule to appear on the
label except for some limited exceptions not applicable here (see 16
CFR 305.11(a)(5)(i)(K)). Accordingly, absent an exemption, the Rule
does not allow the kind of explanatory information proposed by AHAM
(e.g., ``Compare the Energy Use of this Clothes Washer only with other
Models tested to the 2004 Test Procedure'').
Because most consumers use the showroom models for EnergyGuide
information, the Commission believes that there are benefits to
allowing manufacturers to begin changing over to the new labels and
test results sooner. First, as AHAM indicates, this would allow
manufacturers to avoid testing their new products multiple times
pursuant to two test procedures. It is the Commission's understanding
that AHAM's members intend to test new models under the new (J1) test
procedure and use limited testing under the old (J) procedure to
develop data for the purposes of DOE and FTC reporting requirements
during the remainder of 2003. Under this proposal, consumers would
obtain information based on the new test sooner. The Commission also
believes that AHAM's proposed label changes would minimize consumer
confusion resulting from the use of the new test in 2003 by alerting
consumers that the energy use information on some models is derived
from a new test procedure.
The Commission proposes to grant AHAM's request for an exemption
from the requirements in 16 CFR 305.5(a) and
[[Page 16233]]
305.11(a) only to the extent required to allow manufacturers to:
(1) Use the test procedure in 10 CFR part 430, subpart B, Appendix
J1 for determining the energy use figure printed on EnergyGuide labels
of clothes washers distributed between May 1 and December 31, 2003; and
(2) For such models, use EnergyGuide labels that contain the
following modifications to the format and content requirements in 16
CFR 305.11, as illustrated in Prototype Label 2 at the end of this
document:
(a) The use of the statement ``Compare the Energy Use of this
Clothes Washer only with other Models tested to the 2004 Test
Procedure'' in lieu of the statement ``Compare the Energy Use of this
Clothes Washer with Others Before You Buy'';
(b) the use of the statement ``This Model has been Tested to the
2004 Test Procedure. Compare only with Models with this Notice.'' at
the top of the label; and
(c) the use of a label 8 inches (20.32 cm.) in length to
accommodate statements specified in (b) above instead of the 7\3/8\
inch (18.73 cm.) currently required by Sec. 305.11(a)(1) of the Rule.
The Commission proposes to grant the exemption on the following
conditions: (1) That any manufacturers using this exemption must use it
for all clothes washer models introduced between May 1, 2003 and
December 31, 2003 (they may use it for existing models that meet the
new conservation standard), and (2) that the modified EnergyGuide label
must be used if the new (J1) test is used to derive energy use
information on the EnergyGuide label for clothes washers. The
manufacturers would remain obliged to comply with all other Rule
requirements. Manufacturers not specifically named in AHAM's request
would be able to use this exemption as long as they follow the
conditions specified by the Commission.
The Commission is seeking comment on the exemption proposal. In
particular, the Commission would like input on whether the differences
between the results yielded by the new and the old DOE tests for
clothes washers are significant enough to warrant AHAM's proposed label
change. In addition, the Commission seeks comment on whether AHAM's
proposed label changes are appropriate and will help consumers in their
purchasing decisions. For instance, it is possible that the reference
to the year ``2004'' in referring to the test procedure will confuse
consumers who are reading the label in subsequent years (e.g., 2005 or
2006). The Commission has offered alternative language and specific
questions for comment in Section IV below.\6\
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\6\ Given the limited duration of this proposed exemption, the
Commission does not plan to incorporate the exemption into the text
of the Rule (see Sec. 305.19).
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B. Proposed Rule Change for EnergyGuide Labels for 2004 and Beyond
If the Commission grants AHAM's exemption request, it is probable
that many new clothes washers distributed for sale in the United States
for the remainder of 2003 will have labels containing the proposed
advisory language that ``This Model has been Tested to the 2004 Test
Procedure. Compare only with Models with this Notice.'' Once this
change is made to EnergyGuide labels on units distributed in 2003, a
return to the conventional label in the future may cause consumer
confusion because the units with the modified label will stay on
showroom floors into 2004 and beyond. Given these considerations, AHAM
has asked the Commission to make its proposed label changes permanent.
The Commission is seeking public comment on a proposed rule change that
would incorporate AHAM's suggested label changes (see Prototype Label 2
and Sample Label 3) and require these changes for all clothes washers
distributed for sale in the United States beginning January 1, 2004.
The Commission's proposed amendments to this effect appear at the end
of this document.
The Commission believes that it is preferable that any permanent
changes to the EnergyGuide label match the label modifications used
during the exemption period. It could be confusing to consumers to
allow advisory language on the label during the exemption period that
is different from advisory language required by the Rule after January
1, 2004. Accordingly, the Commission believes that, if the exemption is
granted and the Rule is also amended, the modified label language
should be identical in both instances. The Commission seeks comment on
alternatives to the label language proposed by AHAM. Section IV
contains some possible alternatives and specific questions regarding
these proposed amendments.
IV. Request for Comment
The Commission requests that interested persons submit written
comments on any issue of fact, law or policy that may bear upon the
proposed rule and conditional exemption. Although the Commission
welcomes comments on any aspect of these matters, the Commission is
particularly interested in comments on the questions listed in this
section. All written comments should state clearly the question or
issue, or the specific condition, that the commenter wishes to address.
The Commission requests that commenters provide representative
factual data in support of their comments. Experiences of individual
firms are relevant to the extent they typify industry experience in
general or the experience of similar-sized firms. Comments opposing the
proposed conditional exemption and proposed Rule amendments should, if
possible, suggest specific alternatives. Proposals for alternative
conditions should include reasons and data that indicate why the
alternatives would better serve the requirements of the Appliance
Labeling Rule. The Commission is particularly interested in comments
addressing the following questions and issues:
1. Should the Commission grant the requested exemption and permit
manufacturers to begin testing and labeling clothes washers to the new
(J1) test in 2003? Are there alternatives to the proposed conditional
exemption and rule change that would better accomplish the same
objectives?
2. Are the differences between the results yielded by the new (J1)
and old (J) tests significant enough to warrant special advisory
language on the EnergyGuide labels? Are the differences unbiased, or
does one test yield consistently higher or lower results than the
other?
3. If the Commission grants AHAM's exemption request, should the
Commission amend the rule to incorporate label changes as a permanent
requirement?
4. Are AHAM's proposed changes to the label, such as the content,
size, and placement of the modified language on the EnergyGuide,
appropriate? Will the proposed language on the EnergyGuide label help
consumers in their purchasing decisions or will it cause undue
confusion? Will the reference to the year ``2004'' on the label create
confusion in subsequent years if the proposed change becomes a
permanent fixture on the label? Should the explanatory language be
required on both the top and the bottom of the label?
5. Are there additional, or different, changes that should be made
to the label related to AHAM's request?
6. Would either of the following alternatives be preferable to the
language proposed by AHAM:
Alternative 1: Statement at Top of Label--``This Model has been
Tested to
[[Page 16234]]
the ``J1'' Test Procedure. Compare only with Models displaying this
Notice.'' Statement at the Middle of Label--``Compare the Energy Use of
this Clothes Washer only with other Models tested to the J1 Test
Procedure.''
Alternative 2: Statement at Top of Label--``This Model has been
Tested to the Modified Energy Factor Test Procedure. Compare only with
Models displaying this Notice.'' Statement at the Middle of Label--
``Compare the Energy Use of this Clothes Washer only with other Models
tested to the Modified Energy Factor Test Procedure.''
7. Would the implementation of AHAM's proposal cause consumer
confusion for those units with EnergyGuide labels adjoining energy
labels required by Mexico or Canada?
8. Are the conditions under which the Commission proposes the
exemption appropriate? Are there additional, or different, conditions
that also would be appropriate?
9. What would be the economic impact on manufacturers of the
proposed exemption, each of the proposed conditions for use of the
exemption, and proposed rule?
10. What would be the benefits of the proposed conditional
exemption and the proposed rule? Who would receive those benefits?
11. What would be the benefits and economic impact of the proposed
exemption, each of the proposed conditions, and the proposed rule
change on small businesses?
V. Preliminary Regulatory Analysis and Regulatory Flexibility Act
Requirements
Under section 22 of the FTC Act, 15 U.S.C. 57b, the Commission must
issue a preliminary regulatory analysis for a proceeding to amend a
rule only when it: (1) Estimates that the amendment will have an annual
effect on the national economy of $100,000,000 or more; (2) estimates
that the amendment will cause a substantial change in the cost or price
of certain categories of goods or services; or (3) otherwise determines
that the amendment will have a significant effect upon covered entities
or upon consumers. The Commission has preliminarily determined that the
proposed exemption and amendments to the Rule will not have such
effects on the national economy, on the cost of covered products, or on
covered parties or consumers. The Commission, however, requests comment
on the economic effects of the proposed amendments.
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-12, requires
that the agency conduct an analysis of the anticipated economic impact
of the proposed amendments on small businesses. The purpose of a
regulatory flexibility analysis is to ensure that the agency considers
impact on small entities and examines regulatory alternatives that
could achieve the regulatory purpose while minimizing burdens on small
entities. Section 605 of the RFA, 5 U.S.C. 605, provides that such an
analysis is not required if the agency head certifies that the
regulatory action will not have a significant economic impact on a
substantial number of small entities.
There are approximately 20 manufacturers of clothes washers sold in
the United States. Most of these manufacturers are very large. Because
the clothes washer requirements of the Appliance Labeling Rule cover a
limited number of manufacturers, most of which are large, the
Commission does not believe the proposed amendments or exemption will
affect a substantial number of small businesses. In addition, the
proposed amendments and exemptions are unlikely to have a significant
economic impact upon such entities. Specifically, the proposed rule and
exemption involve minor text changes to labels already required by the
Rule. The content of these labels must be changed in response to new
ranges of comparability published by the Commission from time to time.
In the Commission's view, the proposed amendments and exemption should
not have a significant or disproportionate impact on the costs of small
manufacturers and retailers.
Based on available information, therefore, the Commission certifies
that amending the Appliance Labeling Rule as proposed and granting the
requested exemptions will not have a significant economic impact on a
substantial number of small businesses. To ensure that no significant
economic impact is being overlooked, however, the Commission requests
comments on this issue. The Commission also seeks comments on possible
alternatives to the proposed amendments (and exemptions) to accomplish
the stated objectives. After reviewing any comments received, the
Commission will determine whether a final regulatory flexibility
analysis is appropriate.
VI. Paperwork Reduction Act
In a 1988 notice (53 FR 22113), the Commission stated that the Rule
contains disclosure and reporting requirements that constitute
``information collection requirements'' as defined by 5 CFR 1320.7(c),
the regulation that implements the Paperwork Reduction Act.\7\ The
Commission noted that the Rule had been reviewed and approved in 1984
by the Office of Management and Budget (``OMB'') and assigned OMB
Control No. 3084-0068. OMB has again reviewed the Rule and extended its
approval for its recordkeeping and reporting requirements until
September 30, 2004. The exemptions approved here do not change the
substance or frequency of the recordkeeping, disclosure, or reporting
requirements and, therefore, do not require further OMB clearance.
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\7\ 44 U.S.C. 3501-3520.
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VII. Communications by Outside Parties to Commissioners or Their
Advisors
Pursuant to Rule 1.18(c) of the Commission's Rules of Practice, 16
CFR 1.18(c), communications with respect to the merits of this
proceeding from any outside party to any Commissioner or Commissioner's
advisor during the course of this rulemaking shall be subject to the
following treatment. Written communications, including written
communications from members of Congress, shall be forwarded promptly to
the Secretary for placement on the public record. Oral communications,
not including oral communications from members of Congress, are
permitted only when such oral communications are transcribed verbatim
or summarized, at the discretion of the Commissioner or Commissioner's
advisor to whom such oral communications are made, and are promptly
placed on the public record, together with any written communications
and summaries of any oral communications relating to such oral
communications. Oral communications from members of Congress shall be
transcribed or summarized, at the discretion of the Commissioner or
Commissioner's advisor to whom such oral communications are made, and
promptly placed on the public record, together with any written
communications and summaries of any oral communications relating to
such oral communications.
List of Subjects in 16 CFR part 305
Advertising, Energy conservation, Household appliances, Labeling,
Reporting and recordkeeping requirements.
VIII. Proposed Rule Language
For the reasons set out in the preamble, 16 CFR part 305 is
proposed to be amended as follows:
[[Page 16235]]
PART 305--[AMENDED]
1. The authority citation for part 305 continues to read as
follows:
Authority: 42 U.S.C. 6294.
2. Amend Sec. 305.11 by revising paragraphs (a)(1) and
(a)(5)(i)(A) and adding paragraph (a)(5)(i)(L) to read as follows:
Sec. 305.11 Labeling for covered products.
(a) * * * (1) Layout. All energy labels for each category of
covered product shall use one size, similar colors and typefaces with
consistent positioning of headline, copy and charts to maintain
uniformity for immediate consumer recognition and readability. Trim
size dimensions for all labels shall be as follows: width must be
between 5\1/4\ inches and 5\1/2\ inches (13.34 cm. and 13.97 cm.);
length must be 7\3/8\ inches (18.73 cm.) except for clothes washer
labels, which must be 8 inches (20.32 cm.) in length. Copy is to be set
between 27 picas and 29 picas and copy page should be centered (right
to left and top to bottom). Depth is variable but should follow closely
the prototype labels appearing at the end of this part illustrating the
basis layout. All positioning, spacing, type sizes and line widths
should be similar to and consistent with the prototype labels.
* * * * *
(5) * * *
(i) * * *
(A) Headlines and texts, as illustrated in the Prototype Labels in
Appendix L to this Part, are standard for all labels except clothes
washer labels, which must have the text and features described in
paragraph (a)(5)(i)(L) of this section.
* * * * *
(L) Clothes washer labels must have the headlines and texts as
illustrated in Prototype Label 2 of Appendix L of this Part. In
particular, clothes washer labels must have the following headline as
illustrated in Prototype Label 2: ``Compare the Energy Use of this
Clothes Washer only with other Models tested to the 2004 Test
procedure.'' In addition to the requirements for other labels, clothes
washer labels must have a \10/16\ inch (1.59 cm.) in height, process
black bar across the top which contains the following text in process
yellow as illustrated in Prototype Label 2: ``This Model has been
Tested to the 2004 Test Procedure. Compare only with Models displaying
this Notice.''
* * * * *
4. Appendix L to part 305 is amended by revising Prototype Label 2
and Sample Label 3 to read as follows:
Appendix L to Part 305--Sample Labels
* * * * *
BILLING CODE 6750-01-U
[[Page 16236]]
[GRAPHIC] [TIFF OMITTED] TP03AP03.000
* * * * *
[[Page 16237]]
[GRAPHIC] [TIFF OMITTED] TP03AP03.001
* * * * *
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 03-7933 Filed 4-2-03; 8:45 am]
BILLING CODE 6750-01-C