FTC Announced a Rule Governing Labeling of Containers for Recycled or "Re-refined" Oil...

The Federal Trade Commission today announced a rule governing labeling of containers for recycled or"re-refined" oil intended for use as engine oil. The rule, which implements statutory requirements designed to encourage the use of recycled oil, permits manufacturers and other sellers to represent on a recycled engine-oil container label that the oil is substantially equivalent to new engine oil, as long as the determination of equivalency is based on test procedures prescribed by the new FTC rule.

Approximately 65 million gallons of re-refined oil are sold in the United States each year. Recycled oil is used in making passenger car motor oils, diesel engine oils, and other products.

The FTC promulgated the rule as required by the Energy Policy and Conservation Act. The EPCA requires the FTC to prescribe test procedures and labeling standards for recycled oils within 90 days each time the National Institute of Standards and Technology (NIST) develops test procedures for determining the substantial equivalency of re-refined oil or otherwise processed used oil, with new oil for a particular end use. On July 27, NIST reported test procedures to the Commission for determining the equivalency of re-refined or otherwise processed used engine oils with new engine oils. The procedures are the same as those adopted by the American Petroleum Institute (API) for engine lubricating oils generally, irrespective of the oil's origin. On Aug. 24, the Commission sought comments on a proposed rule, and the 20 comments it received are summarized in the Federal Register notice published today announcing the final rule.

The final FTC rule adopts the test procedures developed by NIST, and allows (although it does not require) a manufacturer to represent on a recycled engine-oil container label that the oil is substantially equivalent to new engine oil, as long as the determination of equivalency is based on the NIST test procedures. Manufacturers do not have to conduct the tests themselves; they can use third-party testers. And manufacturers who choose to make that representation also can choose how to do so -- one way is to display the API Service Symbol and API certification mark which identifies engine oils recommended for a specified use. Manufacturers also may label the oil"recycled" to attract environmentally-conscious consumers, but they do not have to add any qualifiers such as"used" or"rerefined."

The EPCA authorizes civil penalties of up $5,000 for each violation of the FTC rule, up to $10,000 in fines for each willful violation, and up to $50,000 in fines and six months in jail for subsequent violations. The rule will be enforced by the Department of Justice, but the FTC has the authority to conduct investigations and recommend cases to Justice where warranted. The rule will be published in the Federal Register shortly.

To ensure a uniform national labeling requirement, the EPCA directs that state laws that conflict with FTC-promulgated rules under the act are preempted.

The Commission vote to adopt the rule was 5-0. Copies of the Recycled Oil Rule and the Federal Register notice, as well as other documents associated with this rulemaking, are available from the FTC"s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580: 202-326-2222; TTY for the hearing impaired 202-326- 2502. To find out the latest news as it happens, call the FTC's NewsPhone at 202-326-2710. FTC news releases and other documents also are available on the Internet at the FTC"s World Wide Web Site at http://www.ftc.gov

(FTC File No. R511036)