UNITED STATES OF AMERICA
The Federal Trade Commission ("FTC" or "Commission"), having reason to believe that Enerjet Corporation ("respondent"), a corporation, has violated the provisions of the Energy Policy and Conservation Act ("EPCA"), the Federal Trade Commission Act ("FTC Act"), and the Rule Concerning Disclosures Regarding Energy Consumption and Water Use of Certain Home Appliances and Other Products Under the Energy Policy and Conservation Act ("Appliance Labeling Rule" or "Rule"), and it appearing to the Commission that this proceeding is in the public interest, alleges:
1. Respondent Enerjet Corporation is a New York corporation with its principal office or place of business at 45 Drexel Drive, Bay Shore, New York 11706.
2. Respondent manufactures, advertises, offers for sale, and sells oil- and gas-fired boilers that are used for residential hot-water or steam space heating. Respondent sells its boilers to distributors, who resell them to installers or residential customers.
3. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act.
4. The EPCA, 42 U.S.C. § 6291 et seq., directs the Commission to prescribe rules requiring manufacturers to affix energy-consumption labels to certain specified appliances, to make certain other disclosures, and to file certain reports. 42 U.S.C. § 6294.
Relevant Provisions of the EPCA and the Appliance Labeling Rule
5. Pursuant to its authority under the EPCA, 42 U.S.C. § 6294, the Commission promulgated the Appliance Labeling Rule. 16 C.F.R. Part 305. Among other things, the Rule prohibits a manufacturer from: (a) knowingly distributing any new covered product in commerce unless the product is labeled in accordance with the Rule, 16 C.F.R. § 305.4(a)(1); (b) knowingly distributing certain covered products, including furnaces, in commerce unless the manufacturer furnishes a fact sheet concerning the product to distributors and retailers that purchase the product (or, alternatively, supplies such information in an approved industry directory), 16 C.F.R. §§ 305.4(a)(1), 305.11(b), (c); and (c) refusing to submit certain prescribed annual reports to the Commission, 16 C.F.R. §§ 305.4(b)(2), 305.8.
6. The EPCA also prohibits a manufacturer from making any representation with respect to the energy use or efficiency of a covered product, or the cost of energy consumed by such product, unless the product has been tested in accordance with a prescribed test procedure and the representation fairly discloses the results of such testing. 42 U.S.C. § 6293(c). A representation that violates § 6293(c) is deemed to be an unfair or deceptive act or practice in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), except to the extent that such representation is a violation of the Appliance Labeling Rule. 42 U.S.C. § 6303(c).
Status of Respondent and Its Products
7. Respondent is a "manufacturer" as defined in the Rule. 16 C.F.R. § 305.2(c). The boilers that respondent manufactures and distributes are "new covered products" and "furnaces" as defined in the Rule. 16 C.F.R. §§ 305.4(l), 305.3(g).
Respondent's Violations of the Appliance Labeling Rule
8. Respondent has knowingly distributed in commerce oil-fired boilers, with model numbers belonging to the "OA" series ("OA oil boilers"), that are not marked with labels displaying the information that the Rule requires. In particular, the labels respondent has used do not display the name of the manufacturer, the annual fuel utilization efficiency rating, the range of annual fuel utilization efficiency ratings for comparable products, an indication of where the labeled product falls within this range, and certain prescribed generic statements, all as required by the Rule, 16 C.F.R. § 305.11(a)(5)(ii). Respondent has thereby violated 16 C.F.R. § 305.4(a)(1).
9. During 1997, respondent knowingly distributed OA oil boilers in commerce without furnishing a fact sheet concerning the boilers to distributors that purchase its products, and without supplying the required information in an approved industry directory, as required by the Rule, 16 C.F.R. § 305.11(b), (c). Respondent has thereby violated 16 C.F.R. § 305.4(a)(1).
10. Respondent has failed to submit an annual report for the year 1997 to the Commission concerning its OA oil boilers, as required by the Rule, 16 C.F.R. § 305.8. Respondent has thereby violated 16 C.F.R. § 305.4(b)(2).
11. The EPCA, as amended by the Debt Collection Improvement Act of 1996, authorizes the Commission to assess a civil penalty of not more than $110 for each violation of the Appliance Labeling Rule. 42 U.S.C. § 6303(a); FTC Rules of Practice, 16 C.F.R. §§ 1.97, 1.98. Each shipment of a covered product that is not labeled as required by the Rule, each covered product that is shipped without provision of a conforming fact sheet, and each day of a manufacturer's failure to submit an annual report constitutes a violation. 42 U.S.C. § 6303(a).
Respondent's Violations of the EPCA
12. Respondent has made representations with respect to the energy efficiency of its OA oil boilers that do not fairly disclose the results of testing of the boilers in accordance with the test procedure prescribed by the Secretary of the Department of Energy under the authority of 42 U.S.C. § 6293. In particular, respondent has produced and distributed brochures describing its OA oil boilers in which it assigns specific annual fuel utilization efficiency ("AFUE") ratings to various of its boilers. The stated AFUE ratings do not accurately disclose the actual ratings of the boilers according to the prescribed test procedures, but rather overstate the energy efficiency of the boilers.
13. The representations described in paragraph 12 violate the EPCA, 42 U.S.C. § 6293(c), and do not violate the Rule. Accordingly, those representations are deemed to be unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
THEREFORE, the Federal Trade Commission this sixteenth day of April, 2001, has issued this complaint against respondent.
By the Commission.
Donald S. Clark