Revisions to Rules of Practice
| Published date | 22 July 2021 |
| Record Number | 2021-15313 |
| Section | Rules and Regulations |
| Court | Federal Trade Commission |
Federal Register, Volume 86 Issue 138 (Thursday, July 22, 2021)
[Federal Register Volume 86, Number 138 (Thursday, July 22, 2021)]
[Rules and Regulations]
[Pages 38542-38553]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-15313]
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FEDERAL TRADE COMMISSION
16 CFR Parts 0 and 1
Revisions to Rules of Practice
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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[[Page 38543]]
SUMMARY: The Commission is amending its rules of practice. The revised
rules modernize procedures for rulemakings to define unfair or
deceptive acts or practices under the FTC Act to provide for more
efficient conduct of rulemaking proceedings. The Commission is also
revising these rules to better reflect the agency's organizational
structure and authority.
DATES: This rule is effective July 22, 2021.
FOR FURTHER INFORMATION CONTACT: Josephine Liu, Assistant General
Counsel for Legal Counsel, (202) 326-2170, or Kenny Wright, Attorney,
(202) 326-2907, Office of the General Counsel, Federal Trade
Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: The Federal Trade Commission is revising the
rules in part 0 and subpart B of part 1 its rules of practice, 16 CFR
parts 0 and 1.
The Commission is amending part 0 to more accurately reflect the
agency's current enforcement authority and organizational structure.
The amendments to part 1, subpart B will govern rulemaking
proceedings under Section 18(a)(1)(B) of the Federal Trade Commission
Act (15 U.S.C. 57(a)(1)(B)) to define unfair or deceptive acts or
practices. These amendments modernize the procedures for rulemaking
proceedings under Section 18 and ensure conformance with the statutory
structure for such proceedings.
The Commission is also making conforming edits to make the rule
language more gender-neutral; use active voice instead of passive
voice; replace ambiguous uses of ``shall'' with ``may'', ``will'', or
``must'' as appropriate; make nonsubstantive grammatical changes; and
add and standardize citations to the U.S. Code where appropriate.
I. Revisions to Part 0--Organization
The Commission is revising certain provisions in part 0 of its
rules to better reflect the agency's current enforcement authority and
organizational structure.
Sec. 0.3: Hours
In Sec. 0.3, the Commission is correcting outdated nomenclature:
The agency's offices outside of Washington, DC are regional offices,
not field offices. The Commission is also clarifying that FTC offices
are generally open from 8:30 a.m. to 5 p.m., except on Saturdays,
Sundays, and legal holidays.
Sec. 0.4: Laws Administered
In Sec. 0.4, the Commission is revising the listing of the various
laws under which the Commission exercises enforcement and
administrative authority. The Commission now enforces or administers
more than 80 laws, which are listed at https://www.ftc.gov/enforcement/statutes. The web page, which is updated regularly, contains summaries
of the laws and links to the relevant statutory texts. Given that the
web page is more comprehensive and more useful than a static list of
laws, the Commission is amending Sec. 0.4 by deleting most items on
the list and adding a cross reference to the web page.
Sec. 0.8: The Chair
The Commission is amending Sec. 0.8 to designate the Chair to
serve as the Chief Presiding Officer or to designate an alternative
Chief Presiding Officer for rulemaking proceedings under Section
18(a)(1)(B) of the FTC Act. As Chief Presiding Officer, the Chair will
also retain authority to designate another Commissioner or another
person who is not responsible to any other official or employee of the
Commission as Chief Presiding Officer. In addition, Section 0.8 is also
being revised to include information about three units that report to
the Office of the Chair: The Office of the Chief Privacy Officer, the
Office of Equal Employment Opportunity and Workplace Inclusion, and the
Office of Policy Planning.
Sec. 0.9: Organization Structure
The Commission is deleting the regional offices from the list of
principal units included in Sec. 0.9. The regional offices operate
under the supervision of the Bureaus of Consumer Protection and
Competition, so listing the regional offices as principal units is not
an accurate description of the agency's organizational structure.
Sec. 0.11: Office of the General Counsel
Section 0.11 is being revised to provide a more detailed
description of the situations when the Office of the General Counsel
(OGC) represents the Commission in court or before administrative
agencies, and also to add that OGC represents the agency in employment
and labor disputes.
Sec. 0.12: Office of the Secretary
The Commission is revising Sec. 0.12 to specify that an Acting
Secretary can sign Commission orders and official correspondence in the
Secretary's absence.
Sec. 0.14: Office of Administrative Law Judges
In Sec. 0.14, to match the changes to Sec. 0.8, the Commission is
deleting the reference to the Chief Administrative Law Judge serving as
the Chief Presiding Officer. The Commission is also deleting a sentence
about ALJs being appointed under the authority of the Office of
Personnel Management. This sentence is no longer legally accurate after
Lucia v. SEC, 585 U.S. __, 138 S. Ct. 2044 (2018) and Executive Order
13843, 83 FR 32755 (2018).
Sec. Sec. 0.16 and 0.17: Bureaus of Competition and Consumer
Protection
The Commission is revising Sec. Sec. 0.16 and 0.17 to harmonize
the description of the work performed by the Bureaus of Competition and
Consumer Protection. Both Bureaus have similar investigative and
enforcement responsibilities. The Commission is also clarifying in
Sec. 0.17 that the Bureau of Consumer Protection (BCP) may initiate
civil penalty proceedings for rule violations and deleting an outdated
discussion about BCP maintaining the agency's public reference
facilities.
Sec. 0.19: The Regional Offices
The Commission is updating Sec. 0.19 to reflect the regional
offices' current responsibilities and organizational structure. The new
language makes clearer that the regional offices are responsible for
enforcement as well as investigations. In addition, the regional
offices are no longer under the general supervision of the Office of
the Executive Director. Instead, they are under the general supervision
of the Bureaus of Competition and Consumer Protection and clear their
activities through the appropriate Bureau. Section 0.19(b) is being
revised to reflect the various offices' current geographic areas of
responsibility; to delete the regional offices' address information,
which can quickly become outdated; and to reflect the fact that the
Western Region has split into two separate regions: Western Region Los
Angeles and Western Region San Francisco.
Sec. 0.20: Office of International Affairs
The Commission is revising Sec. 0.20 to clarify the role of the
Office of International Affairs (OIA). OIA's responsibilities include
handling the FTC's international antitrust and consumer protection
missions in coordination and consultation with the appropriate Bureaus;
cooperating with foreign authorities on investigations and enforcement;
participating in the United States government interagency process to
promote agency views on
[[Page 38544]]
international issues within the FTC's mandate; coordinating staff
exchanges and internships at the FTC for staff of non-U.S. competition,
consumer protection, and privacy agencies; and building capacity at
other agencies around the world.
II. Revisions to Part 1, Subpart B--Rules and Rulemaking Under Section
18(a)(1)(B) of the FTC Act
The Commission is revising part 1, subpart B of its rules to
modernize the procedures governing rulemaking under Section 18(a)(1)(B)
of the FTC Act, provide for efficient conduct of rulemaking
proceedings, and to better reflect the requirements of the FTC Act.
Sec. 1.11: Commencement of a Rulemaking Proceeding
The Commission is revising procedures under Sec. 1.11 for the
initiation of rulemaking proceedings under Section 18(a)(1)(B) of the
FTC Act. Pursuant to these amendments, rulemaking proceedings will
commence with the issuance of a notice of proposed rulemaking that will
include the text of the proposed rule, a preliminary regulatory
analysis and explanation of the Commission's proposal, and an
invitation for interested persons to comment. Pursuant to the
requirements of the FTC Act, the Commission will afford interested
persons an opportunity to request an informal hearing in response to
this notice and will identify disputed issues of material fact, if any,
necessary to be resolved in the rulemaking proceeding.
Interested persons who request to present their position orally in
an informal hearing must file a request with the Commission after
issuance of a notice of proposed rulemaking. This request must include
a statement identifying the person's interests in the proceeding and
may propose additional disputed issues for resolution at the informal
hearing.
Sec. 1.12: Notices of Informal Hearings and Designations
Section 18(c)(2) of the FTC Act also provides an opportunity for
interested persons to submit their views on a proposed rule orally at
an informal hearing. 15 U.S.C. 57a(c)(2). In Sec. 1.12, the Commission
is amending the provisions governing the conduct of such proceedings.
When an informal hearing is requested or the Commission determines in
its discretion to hold one, the informal hearing will be initiated by a
notice of informal hearing.
Pursuant to the amendments, the Commission will issue an initial
notice of informal hearing to announce necessary details for an
informal hearing, including the designation of a presiding officer, the
time and place of the informal hearing, a final list of disputed issues
of material fact to be resolved, and a list of persons who will make
oral presentations. The initial notice of informal hearing will also
invite interested persons to submit requests for cross-examination or
to present rebuttal submissions.
Based upon submissions in response to the initial notice of
informal hearing, the Commission will issue a final notice of informal
hearing providing a list of interested persons who will conduct cross-
examination regarding disputed issues of material fact, any groups with
the same or similar interests who will be required to select a
representative to conduct cross-examination on behalf of the group, and
any interested persons who will be permitted to make rebuttal
submissions.
To provide for the efficient conduct of informal hearings, the
amendments retain provisions authorizing the Commission to group
persons with similar interests and require the selection of a group
representative to conduct cross-examination. The amended rules preserve
the authority of the presiding officer to designate group
representatives if a group of interested persons is unable to agree
upon a representative and to entertain requests for an individual to
conduct cross-examination on select issues that affect that person's
particular interest if a designated group representative would not
adequately represent their interests.
Sec. 1.13: Conduct of Informal Hearing by the Presiding Officer
The Commission is amending Sec. 1.13 to focus on the presiding
officer's powers and responsibilities for the orderly conduct of an
informal hearing. The amendments provide the presiding officer with the
powers necessary to conduct effective and orderly informal hearings in
rulemaking proceedings.
The amendments provide that the Commission will establish the time
and location of informal hearings, select participants who shall
provide oral presentations, and designate disputed issues of material
fact, if any, that are to be resolved in the rulemaking proceedings.
The presiding officer designated by the Commission will have the
necessary powers to conduct hearings in an efficient manner, including
the power to impose time limits on oral presentations and to select or
modify representatives designated to conduct cross-examination. The
amendments also provide that informal hearings will be limited to a
total of 5 days over the course of a thirty-day period, unless
Commission extends the time for conduct of a hearing upon a showing of
good cause.
The amendments remove references to direct examination in informal
hearings. Providing interested persons with the opportunity to present
their positions orally does not require the formality of direct
examination. Consistent with Section 18 of the FTC Act, the amended
rules continue to allow an interested person to cross-examine those
making oral presentations if appropriate and required to address
disputed issues of material fact.
The amendments also remove procedures to allow the presiding
officer to compel the attendance of persons, require the production of
documents, or require responses to written questions. The Commission
believes that these procedures are unnecessary for the conduct of
effective informal hearings in rulemaking proceedings and are
inconsistent with the informal nature of such proceedings.
The revisions also eliminate the requirement that Commission staff
publish a staff report containing an analysis of the rulemaking record
and recommendations as to the form of the final rule for public
comment. Such reports are not statutorily required in rulemaking
proceedings under Section 18(a)(1)(B), and the Commission believes that
eliminating this requirement will provide for more efficient
proceedings without undermining the Commission's ability to formulate
effective rules. The amendments also eliminate provisions providing for
an additional comment period on the presiding officer's report on the
rulemaking proceeding.
The proposed amendments eliminate procedures allowing interested
persons to petition the Commission or to appeal rulings of the
presiding officer during an informal hearing. These provisions add
procedural complexity to informal hearings that are inconsistent with
the informal nature of the rulemaking process. In addition, they are
unnecessary given the enhanced role the Commission will play in
establishing the agenda of the informal hearing and designating
disputed issues, if any, for resolution at the informal hearing.
Instead, the amended rules provide a separate post-hearing process for
petitions seeking Commission review of any rulings by the presiding
officer denying or limiting the petitioner's ability to conduct cross-
examination or make rebuttal submissions.
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Sec. 1.18: Rulemaking Record
Consistent with Section 18 of the FTC Act, the amended rules
continue to provide that communications about the merits of a
rulemaking to a Commissioner or Commissioner's advisor will be placed
on the rulemaking record. The Commission is revising Sec. 1.18 to
remove unnecessary language distinguishing between oral communications
received during the comment period and those received following the
close of the comment period on a proposed rule. The amendments require
that a Commissioner's advisor will ensure that any oral communications
to a Commissioner or Commissioner's advisor during a rulemaking
proceeding will be placed on the rulemaking record through either a
transcript of the communication or a memorandum that summarizes the
meeting, including a list of all persons attending and a summary of all
data and arguments presented. In addition, the amendments clarify the
treatment of written communications to a Commissioner or their staff
during the rulemaking proceeding. The amended rules provide that
written communications received during a time period designated for
acceptance of written comments or submissions will be placed on the
rulemaking record, while written communications received outside these
designated periods will be placed on the public record unless the
Commission votes to place them on the rulemaking record. The amendments
also provide that communications from Members of Congress will be
placed on the rulemaking record if received during the time period for
comments and on the public record if received following the time period
for public comment.
III. Global Revisions
The Commission is also making various changes throughout parts 0
and 1 to:
Reflect that Commission rulemaking notices in proceedings
under Section 18(a)(1)(B) of the FTC Act must be submitted to the
Committee on Energy and Commerce of the House of Representatives;
Make the rule language more gender-neutral; \1\
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\1\ In particular, the Commission is revising the rules to
eliminate the use of he, him, or his as default pronouns. This
change conforms with the recommendations of numerous style manuals.
See, e.g., Lauren Easton, Making a Case for a Singular ``They,'' The
Definitive Source (Mar. 24, 2017), https://blog.ap.org/products-and-services/making-a-case-for-a-singular-they (discussing the following
addition to the AP Stylebook: ``They/them/their is acceptable in
limited cases as a singular and-or gender-neutral pronoun, when
alternative wording is overly awkward or clumsy.''); Chicago Style
for the Singular They (Apr. 3, 2017), http://cmosshoptalk.com/2017/04/03/chicago-style-for-the-singular-they/ (noting that the
seventeenth edition of the Chicago Manual of Style does not prohibit
the use of singular they as a substitute for the generic he in
formal writing, but recommends avoiding it and offers various other
ways to achieve bias-free language); Bill Walsh, The Post Drops the
``Mike''--and the Hyphen in ``Email'', Wash. Post (Dec. 4, 2015),
https://www.washingtonpost.com/opinions/the-post-drops-the-mike-and-the-hyphen-in-email/2015/12/04/ccd6e33a-98fa-11e5-8917-653b65c809eb_story.html (noting that the Washington Post stylebook
advises trying to write around the problem, perhaps by changing
singulars to plurals, before using the singular they as a last
resort).
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Use active voice instead of passive voice;
Replace ambiguous uses of ``shall'' with ``may'',
``will'', or ``must'' as appropriate;
Make nonsubstantive grammatical changes; and
Add and standardize citations to the U.S. Code where
appropriate.
IV. Procedural Requirements
The Commission has determined that this rule is exempt from the
notice and comment requirements of the Administrative Procedure Act, 5
U.S.C. 553(b), as a rule of agency organization, practice, and
procedure. In addition, only substantive rules require publication 30
days prior to their effective date. 5 U.S.C. 553(d). Therefore, this
final rule is effective upon publication in the Federal Register. The
requirements of the Regulatory Flexibility Act also do not apply.\2\
Further, this rule does not contain any information collection
requirements as defined by the Paperwork Reduction Act of 1995 as
amended. 44 U.S.C. 3501 et seq.
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\2\ A regulatory flexibility analysis under the RFA is required
only when an agency must publish a notice of proposed rulemaking for
comment. See 5 U.S.C. 603.
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Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
List of Subjects in 16 CFR Part 1
Administrative practice and procedure.
For the reasons set forth in the preamble, the Federal Trade
Commission amends title 16, chapter I, subchapter A of the Code of
Federal Regulations as follows:
PART 0--ORGANIZATION
0
1. The authority for Part 0 continues to read as follows:
Authority: 5 U.S.C. 552(a)(1); 15 U.S.C. 46(g).
Sec. 0.1 [Amended]
0
2. In Sec. 0.1, remove the word ``which'' wherever it appears and add,
in its place, the word ``that''.
0
3. Amend Sec. 0.2 by revising the first sentence to read as follows:
Sec. 0.2 Official address.
The principal office of the Commission is in Washington, DC. * * *
0
4. Revise Sec. 0.3 to read as follows:
Sec. 0.3 Hours.
Principal and regional offices are open from 8:30 a.m. to 5 p.m.,
except on Saturdays, Sundays, and legal holidays.
0
5. Revise Sec. 0.4 to read as follows:
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), and more than 70 other Federal statutes, which are
listed at https://www.ftc.gov/enforcement/statutes.
0
6. Revise Sec. 0.5 to read as follows:
Sec. 0.5 Laws authorizing monetary claims.
(a) The Commission is authorized to entertain monetary claims
against it under three statutes.
(1) 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.
(2) 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.
(3) 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.
(b) 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
[[Page 38546]]
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.
Sec. 0.7 [Amended]
0
7. Amend Sec. 0.7 by:
0
a. In paragraph (a), adding the words ``(15 U.S.C. 41 note)'' after the
term ``1961''; and
0
b. In paragraph (b), removing the word ``shall'' and adding, in its
place, the word ``will''.
0
8. Revise Sec. 0.8 to read as follows:
Sec. 0.8 The Chair.
The Chair 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. The Chair presides at meetings of
and hearings before the Commission and participates with other
Commissioners in all Commission decisions. In rulemaking proceedings
under section 18(a)(1)(B) of the Federal Trade Commission Act (15
U.S.C. 57a(a)(1)(B)), the Chair serves as or may designate another
Commissioner to serve as the Chief Presiding Officer or may appoint
another person to serve as Chief Presiding Officer who is not
responsible to any other official or employee of the Commission.
Attached to the Office of the Chair, and reporting directly to the
Chair, and through the Chair to the Commission, are the following staff
units:
(a) The Office of the Chief Privacy Officer, which ensures that the
agency's practices and policies comply with applicable federal
information privacy and security requirements and standards;
(b) The Office of Congressional Relations, which coordinates all
liaison activities with Congress;
(c) The Office of Equal Employment Opportunity and Workplace
Inclusion, which advises and assists the Chair and the organizational
units in EEO policy and diversity management issues;
(d) The Office of Policy Planning, which assists the Commission to
develop and implement long-range competition and consumer protection
policy initiatives; and
(e) The Office of Public Affairs, which furnishes information
concerning Commission activities to news media and the public.
0
9. Revise Sec. 0.9 to read as follows:
Sec. 0.9 Organization structure.
The Federal Trade Commission includes 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 Office of International Affairs.
Sec. 0.10 [Amended]
0
10. In Sec. 0.10, in the first sentence, add a comma after the word
``programs''.
0
11. Revise Sec. 0.11 to read as follows:
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, and before
administrative agencies in coordination with the Bureaus, in appellate
litigation, investigative compulsory process enforcement, and defensive
litigation; 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; represents the agency in
employment and labor disputes; and responds to requests and appeals
filed under the Freedom of Information and Privacy Acts and to intra-
and intergovernmental information access requests.
0
12. Revise Sec. 0.12 to read as follows:
Sec. 0.12 Office of the Secretary.
The Secretary is the legal custodian of the Commission's seal,
property, papers, and records, including legal and public records, and
is responsible for the minutes of Commission meetings. The Secretary,
or in the Secretary's absence an Acting Secretary, 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.
Sec. 0.13 [Amended]
0
13. In Sec. 0.13, in the second sentence, add a comma after the word
``efficiency''.
0
14. Revise Sec. 0.14 to read as follows:
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.
0
15. Revise Sec. 0.16 to read as follows:
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 (15
U.S.C. 45), the Clayton Act (15 U.S.C. 12-27), and a number of other
special statutes that the Commission is charged with enforcing. The
Bureau carries out its responsibilities by investigating alleged law
violations, recommending to the Commission such further steps as may be
appropriate, and prosecuting enforcement actions authorized by the
Commission. Such further steps may include seeking injunctive and other
relief as permitted by statute in Federal district court; litigating
before the agency's administrative law judges; negotiating settlement
of complaints; and initiating rules or reports. The Bureau also
conducts compliance investigations and, in compliance with Section
16(a)(1) of the FTC Act (15 U.S.C. 56(a)(1)), initiates proceedings for
civil penalties to assure compliance with final Commission orders
dealing with competition and trade restraint matters. The 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.
0
16. Revise Sec. 0.17 to read as follows:
Sec. 0.17 Bureau of Consumer Protection.
The Bureau is responsible for enforcing the prohibition against
unfair or deceptive acts or practices in section 5 of the Federal Trade
Commission Act (15 U.S.C. 45), as well as numerous special statutes
that the Commission is charged with enforcing. The Bureau carries out
its responsibilities by investigating alleged law violations,
recommending to the Commission such further steps as may be
appropriate, and prosecuting enforcement actions authorized by the
Commission. Such further steps may include seeking injunctive and other
relief as permitted by statute in Federal district court; litigating
before the agency's administrative law judges; negotiating settlement
of complaints; initiating rules or reports; and initiating civil
penalty proceedings for rule violations. The Bureau also conducts
compliance investigations and, in compliance with Section 16(a)(1) of
the FTC Act (15 U.S.C. 56(a)(1)), initiates proceedings for
[[Page 38547]]
civil penalties to assure compliance with final Commission orders
dealing with unfair or deceptive practices. The Bureau participates in
trade regulation rulemaking proceedings under section 18(a)(1)(B) of
the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) and other
rulemaking proceedings under statutory authority. 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, and international agencies and organizations in consumer
protection enforcement and regulatory matters.
Sec. 0.18 [Amended]
0
17. Amend Sec. 0.18 by,
0
a. Removing the word ``bureau'' wherever it appears and adding, in its
place, the word ``Bureau''.
0
b. Removing the word ``bureaus'' and adding, in its place, the word
``Bureaus''.
0
18. Revise Sec. 0.19 to read as follows:
Sec. 0.19 The Regional Offices.
(a) These offices are investigatory and enforcement 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 Bureaus of
Competition and Consumer Protection and clear their activities through
the appropriate operating Bureau.
(b) The names and geographic areas of responsibility 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, Puerto Rico, and the U.S. Virgin Islands.
(2) Southeast Region (located in Atlanta, Georgia), covering
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
and Tennessee.
(3) East Central Region (located in Cleveland, Ohio), covering
Delaware, District of Columbia, Maryland, Michigan, Ohio, Pennsylvania,
Virginia, and West Virginia.
(4) Midwest Region (located in Chicago, Illinois), covering
Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Missouri,
Nebraska, North Dakota, South Dakota, and Wisconsin.
(5) Southwest Region (located in Dallas, Texas), covering Arkansas,
Louisiana, New Mexico, Oklahoma, and Texas.
(6) Northwest Region (located in Seattle, Washington), covering
Alaska, Idaho, Montana, Oregon, Washington, and Wyoming.
(7) Western Region Los Angeles (located in Los Angeles,
California), covering Arizona, Hawaii, Southern California, Southern
Nevada, Guam, the Northern Mariana Islands, and American Samoa.
(8) Western Region San Francisco (located in San Francisco,
California), covering Colorado, Northern California, Northern Nevada,
and Utah.
(c) Each of the regional offices is supervised by a Regional
Director and an Assistant Regional Director, who are available for
conferences with attorneys, consumers, and other members of the public
on matters relating to the Commission's activities.
0
19. Revise Sec. 0.20 to read as follows:
Sec. 0.20 Office of International Affairs.
The Office of International Affairs (OIA) is responsible for the
agency's international antitrust and international consumer protection
missions in coordination and consultation with the appropriate Bureaus,
including the design and implementation of the Commission's
international program. OIA provides support to the Bureaus of
Competition and Consumer Protection with regard to the international
aspects of investigation and prosecution of unlawful conduct; builds
cooperative relationships between the Commission and foreign
authorities; cooperates with foreign authorities on investigations and
enforcement; works closely with the Bureaus to recommend agency
policies to the Commission; works, through bilateral relationships,
multilateral organizations, and trade fora to promote Commission
priorities and policies; participates in the United States government
interagency process to promote agency views on international issues
within the FTC's mandate; and coordinates staff exchanges and
internships at the FTC for staff of non-U.S. competition, consumer
protection, and privacy agencies. OIA also assists young agencies
around the world to build capacity to promote sound competition and
consumer protection law enforcement.
PART 1--GENERAL PROCEDURES
0
20. Revise the authority for subpart B of Part 1 to read as follows:
Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; 5 U.S.C.
601 note.
0
21. Revise Sec. 1.7 to read as follows:
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 (15 U.S.C. 57a(a)(1)(B)). Such rules will be known
as trade regulation rules. All other rulemaking proceedings will be
governed by the rules in subpart C of this part, except as otherwise
required by law or as otherwise specified in this chapter.
0
22. Revise Sec. 1.8 to read as follows:
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 that
are unfair or deceptive acts or practices in or affecting commerce.
Trade regulation rules may include requirements prescribed for the
purpose of preventing such acts or practices. A violation of a rule
constitutes an unfair or deceptive act or practice in violation of
section 5(a)(1) of that Act (15 U.S.C. 45(a)(1)), unless the Commission
otherwise expressly provides in its rule. The respondents in an
adjudicative proceeding may show that the alleged conduct does not
violate the rule or assert any other defense to which they are 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 part 2, subpart A of this chapter.
Sec. 1.9 [Amended]
0
23. In Sec. 1.9, remove the word ``shall'' from wherever it appears in
the section and add, in its place, the word ``will''.
0
24. Revise Sec. 1.10 to read as follows:
Sec. 1.10 Advance notice of proposed rulemaking.
(a) Prior to the commencement of any trade regulation rule
proceeding, the Commission must publish in the Federal Register an
advance notice of such proposed proceeding.
(b) The advance notice must:
(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 must be submitted to the Committee on
[[Page 38548]]
Commerce, Science, and Transportation of the Senate and to the
Committee on Energy and 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 a notice of proposed rulemaking pursuant to Sec. 1.11.
0
25. Revise Sec. 1.11 to read as follows:
Sec. 1.11 Commencement of a rulemaking proceeding.
(a) Notice of proposed rulemaking. A trade regulation rule
proceeding will commence with a notice of proposed rulemaking (NPRM).
An NPRM will 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 Energy and
Commerce of the House of Representatives.
(b) Contents of NPRM. The NPRM will include:
(1) A statement containing, with particularity, 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 the reason for the proposed rule;
(4) An invitation to comment on the proposed rule, as provided in
paragraph (d) of this section;
(5) A list of disputed issues of material fact designated by the
Commission as necessary to be resolved, if any;
(6) An explanation of the opportunity for an informal hearing and
instructions for submissions relating to such a hearing, as provided in
paragraph (e) of this section; and
(7) A statement of the manner in which the public may obtain copies
of the preliminary regulatory analysis, if that analysis is not in the
notice.
(c) Preliminary regulatory analysis. Except as otherwise provided
by statute, the Commission must, when commencing a rulemaking
proceeding, issue a preliminary regulatory analysis, which must
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.
(d) Written comments. The Commission will accept written
submissions of data, views, and arguments on all issues of fact, law,
and policy. The Commission may in its discretion provide for a separate
rebuttal period following the comment period. The subject matter of any
rebuttal comments must be confined to subjects and issues identified by
the Commission in its notice or by other interested persons in comments
and must not introduce new issues into the record. The NPRM will
establish deadlines for filing written comments and for filing rebuttal
comments on the proposed rule.
(e) Opportunity for hearing. The Commission will provide an
opportunity for an informal hearing if an interested person requests to
present their position orally or if the Commission in its discretion
elects to hold an informal hearing. Any such request regarding an
informal hearing must be submitted to the Commission no later than the
close of the written comment period, including a rebuttal period, if
any, and must include:
(1) A request to make an oral submission, if desired;
(2) A statement identifying the interested person's interests in
the proceeding; and
(3) Any proposals to add disputed issues of material fact beyond
those identified in the notice.
0
26. Revise Sec. 1.12 to read as follows:
Sec. 1.12 Notice of Informal Hearing and Designations.
(a) Initial notice of informal hearing. If an informal hearing has
been requested under Sec. 1.11(e), a notice of informal hearing will
be published in the Federal Register. The initial notice of informal
hearing will include:
(1) The designation of a presiding officer, pursuant to Sec.
1.13(a)(1);
(2) The time and place of the informal hearing;
(3) A final list of disputed issues of material fact necessary to
be resolved during the hearing, if any;
(4) A list of the interested persons who will make oral
presentations;
(5) A list of the groups of interested persons determined by the
Commission to have the same or similar interests in the proceeding;
(6) An invitation to interested persons to submit requests to
conduct or have conducted cross-examination or to present rebuttal
submissions, pursuant to Sec. 1.13(b)(2), if desired; and
(7) Any other procedural rules necessary to promote the efficient
and timely determination of the disputed issues to be resolved during
the hearing.
(b) Requests to conduct cross-examination or present rebuttal
submissions. Cross-examination and rebuttal submissions at an informal
hearing are available only to address disputed issues of material fact
necessary to be resolved. Requests for an opportunity to cross-examine
or to present rebuttal submissions must be accompanied by a specific
justification therefor. In determining whether to grant such requests,
the presence of the following circumstances indicate that such requests
should be granted:
(1) An issue for cross-examination or the presentation of rebuttal
submissions, is an issue of specific fact in contrast to legislative
fact;
(2) A full and true disclosure with respect to the issue can be
achieved only through cross-examination rather than through rebuttal
submissions or the presentation of additional oral submissions; and
(3) The particular cross-examination or rebuttal submission is
required for the resolution of a disputed issue.
(c) Final notice of informal hearing. Based on requests submitted
in response to the initial notice of public hearing, the Commission
will publish a final notice of informal hearing in the Federal
Register. The final notice of public hearing will include:
(1) A list of the interested persons who will conduct cross-
examination regarding disputed issues of material fact;
(2) A list of any groups of interested persons with the same or
similar interests in the proceeding who will be required to choose a
single representative to conduct cross-examination on behalf of the
group, as provided in paragraph (d) of this section; and
(3) A list of the interested persons who will be permitted to make
rebuttal submissions regarding disputed issues of material fact.
(d) Designation of group representatives for cross-examination.
After consideration of any submissions under Sec. 1.11(e), the
Commission will, if appropriate, identify groups of interested persons
with the same or similar interests in the proceeding. The Commission
may require any group of
[[Page 38549]]
interested persons with the same or similar interests in the proceeding
to select a single representative to conduct cross-examination on
behalf of the group.
0
27. Revise Sec. 1.13 to read as follows:
Sec. 1.13 Conduct of informal hearing by the presiding officer.
(a) Presiding officer--(1) Designation. In a trade regulation rule
proceeding in which the Commission determines an informal hearing will
be conducted, the initial notice of informal hearing must designate a
presiding officer, who will be appointed by the Chief Presiding Officer
specified in Sec. 0.8 of this chapter.
(2) Powers of the presiding officer. The presiding officer is
responsible for the orderly conduct of the informal hearing. The
presiding officer has all powers necessary or useful to that end,
including the following:
(i) To issue any public notice that may be necessary for the
orderly conduct of the informal hearing;
(ii) To modify the location, format, or time limits prescribed for
the informal hearing, except that the presiding officer may not
increase the time allotted for an informal hearing beyond a total of
five hearing days over the course of a thirty-day period, unless the
Commission, upon a showing of good cause, extends the number of days
for the hearing;
(iii) To prescribe procedures or issue rulings to avoid unnecessary
costs or delay, including, but not limited to, the imposition of
reasonable time limits on the number and duration of oral presentations
from individuals or groups with the same or similar interests in the
proceeding and requirements that any 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(b)(1);
(iv) To issue rulings selecting or modifying the designated
representatives of groups of interested persons, as provided in
paragraph (a)(3) of this section;
(v) To require that oral presentations at the informal hearing be
under oath;
(vi) To require that oral presentations at the informal hearing be
submitted in writing in advance of presentation; and
(viii) To rule on all requests of interested persons made during
the course of the informal hearing.
(3) Selection or modification of group representatives. If a group
of interested persons designated by the Commission under Sec. 1.12(d)
to select a group representative is unable to agree upon a
representative, the presiding officer may select a representative for
the group. The presiding officer may entertain requests by a member of
a group of interested persons to conduct or have conducted cross-
examination under paragraph (b)(2) of this section if, after good-faith
effort, the person is unable to agree upon a single representative with
other group members and is able to demonstrate that the group
representative will not adequately represent the person's interests. If
the presiding officer finds that there are substantial and relevant
issues or data that will not be adequately presented by the group
representative, then the presiding officer may allow that person to
conduct or have conducted any appropriate cross-examination on issues
affecting the person's particular interests.
(4) Organization. In the performance of their rulemaking functions,
presiding officers are responsible to the chief presiding officer who
must not be responsible to any other officer or employee of the
Commission.
(5) Ex parte communications. Except as required for the disposition
of ex parte matters as authorized by law, no presiding officer may
consult any person or party with respect to any fact in issue unless
such officer gives notice and opportunity for all parties to
participate.
(b) Additional procedures when there are disputed issues of
material fact. If requested under Sec. 1.11(d), an informal hearing
with the opportunity for oral presentations will be conducted by the
presiding officer. In addition, if the Commission determines that there
are disputed issues of material fact that are material and necessary to
resolve, the informal hearing on such issues will be conducted in
accordance with Sec. 1.13(b)(2).
(1) Nature of issues for consideration in accordance with Sec.
1.13(b)(2)--(i) Issues that must be considered in accordance with Sec.
1.13(b)(2). The only issues that must be designated for consideration
in accordance with paragraphs (b)(2) of this section are disputed
issues of fact that are determined by the Commission to be material and
necessary to resolve.
(ii) Addition or modification of issues for consideration in
accordance with Sec. 1.13(b)(2). The presiding officer may at any time
on the presiding officer's 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.
1.11(e). In the event that new issues are designated, the presiding
officer may determine whether interested persons may conduct cross-
examination or present rebuttal submissions with respect to each new
issue, as provided in Sec. 1.12(b), and may select or modify group
representatives for cross examination with respect to each new issue,
as provided in paragraph (a)(3) of this section.
(2) Cross-examination and the presentation of rebuttal submissions
by interested persons. The presiding officer will conduct or allow to
be conducted cross-examination of oral presentations and the
presentation of rebuttal submissions relevant to the disputed issues of
material fact designated for consideration during the informal hearing.
For that purpose, the presiding officer may require submission of
written requests for presentation of questions to any person making
oral presentations and will determine whether to ask such questions or
any other questions. All requests for presentation of questions will be
placed in the rulemaking record. The presiding officer will also allow
the presentation of rebuttal submissions as appropriate and required
for a full and true disclosure with respect to the disputed issues of
material fact designated for consideration during the informal hearing.
(c) Written transcript. A verbatim transcript will be made of the
informal hearing and placed in the rulemaking record.
(d) Recommended decision. The presiding officer will make a
recommended decision based on their findings and conclusions as to all
relevant and material evidence. The recommended decision will be made
by the presiding officer who presided over the informal hearing except
that such recommended decision may be made by another officer if the
officer who presided over the hearing is no longer available to the
Commission. The recommended decision must be rendered within sixty days
of the completion of the hearing. If a petition for review of a ruling
by the presiding officer has been filed under paragraph (e) of this
section, the recommended decision must be rendered within sixty days
following the resolution of that petition or any rehearing required by
the Commission. The presiding officer's recommended decision will be
limited to explaining the presiding officer's proposed resolution of
disputed issues of material fact.
(e) Post-hearing review by the Commission of rulings by the
presiding
[[Page 38550]]
officer. (1) Within ten days of the completion of the informal hearing,
any interested person may petition the Commission for review of a
ruling by the presiding officer denying or limiting the petitioner's
ability to conduct cross-examination or make rebuttal submissions upon
a showing that the ruling precluded disclosure of a disputed material
fact that was necessary for fair determination by the Commission of the
rulemaking proceeding as a whole. Such petitions must not exceed eight
thousand words. This word count limitation includes headings,
footnotes, and quotations, but does not include the cover, table of
contents, table of citations or authorities, glossaries, statements
with respect to oral argument, any addendums containing statutes, rules
or regulations, any certificates of counsel, or proposed form of order.
A petition hereunder will not stay the rulemaking proceeding unless the
Commission so orders. All petitions filed under this paragraph will be
a part of the rulemaking record.
(2) The Commission may, in its discretion, hear the appeal.
Commission review, if granted, will be based on the petition and
anything on the rulemaking record, without oral argument or further
briefs, unless otherwise ordered by the Commission. If the Commission
grants review, it will render a decision within thirty days of the
announcement of its decision to review unless, upon a showing of good
cause, the Commission extends the number of days for review.
0
28. Revise Sec. 1.14 to read as follows:
Sec. 1.14 Promulgation.
(a) The Commission, after review of the rulemaking record, may
issue, modify, or decline to issue any rule. If the Commission wants
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 will adopt a statement of basis and purpose to
accompany the rule, which must include:
(i) A statement regarding 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; and
(iii) A statement as to the economic effect of the rule, taking
into account the effect on small businesses and consumers.
(2) Final regulatory analysis. Except as otherwise provided by
statute, if the Commission determines to promulgate a final rule, it
will issue a final regulatory analysis relating to the final rule. Each
final regulatory analysis must 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 that 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.''
(b) If 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(b)(2), will 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 will be published in the Federal Register and
will include the Statement of Basis and Purpose for the rule or provide
an explanation of the manner in which the public may obtain copies of
that document.
0
29. Revise Sec. 1.16 to read as follows:
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 will be those of subpart C of this part.
0
30. Revise Sec. 1.18 to read as follows:
Sec. 1.18 Rulemaking record.
(a) Definition. For purposes of these rules the term rulemaking
record includes the final rule, its statement of basis and purpose, the
verbatim transcripts of the informal hearing, if any, written
submissions, the recommended decision of the presiding officer, any
communications placed on the rulemaking record pursuant to Sec.
1.18(c), and any other information the Commission considers relevant to
the rule.
(b) Public availability. The rulemaking record will be publicly
available except when the Commission, 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. 4.9 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 a notice of proposed rulemaking, comment on the proposed
rule should be directed as provided in the notice. Communications with
respect to the merits of that proceeding from any outside party to any
Commissioner or Commissioner's advisor will 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 or rebuttal written comments or other
written submissions will be placed on the rulemaking record. Written
communications received outside of the time periods designated for
acceptance of written comments or other written submissions will be
placed on public record unless the Commission votes to place them on
the rulemaking record.
(ii) Oral communications. Oral communications to a Commissioner or
Commissioner's advisor are permitted only when advance notice of such
oral communications is published by the Commission's Office of Public
Affairs in its Weekly Calendar and Notice of ``Sunshine'' Meetings. A
Commissioner's advisor will ensure 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 promptly placed on the rulemaking record. Memoranda
summarizing such
[[Page 38551]]
oral communications must list all persons attending or otherwise
participating in the meeting at which the oral communication was made,
and summarize all data presented and arguments made during the meeting.
(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's
advisor setting forth the contents of any oral congressional
communications will be placed on the public record. If the
communication occurs within the 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
written comments will be placed promptly on the public record.
(2) Communications by certain officers, employees, and agents of
the Commission. After the Commission votes to issue a notice of
proposed rulemaking, 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 do not apply to any communication to the extent such
communication is required for the disposition of ex parte matters as
authorized by law.
0
31. Revise Sec. 1.19 to read as follows:
Sec. 1.19 Modification of a rule by the Commission at the time of
judicial review.
If a reviewing court orders, under section 18(e)(2) of the Federal
Trade Commission Act (15 U.S.C. 57a(e)(2)), 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 will then be filed with the
court together with an appropriate statement of basis and purpose and
the return of such submissions and presentations.
0
32. Revise Sec. 1.20 to read as follows:
Sec. 1.20 Alternative procedures.
If the Commission determines at the commencement of a rulemaking
proceeding to employ procedures other than those established in this
subpart, it may do so by announcing those procedures in the Federal
Register notice commencing the rulemaking proceeding.
By direction of the Commission.
April J. Tabor,
Secretary.
The Following Will Not Appear in the Code of Federal Regulations
Statement of Commissioner Rebecca Kelly Slaughter Joined by Chair Lina
Khan and Commissioner Rohit Chopra Regarding the Adoption of Revised
Section 18 Rulemaking Procedures
The FTC's revisions to Parts 0 and 1 of the Commission's Rules of
Practice will bring the Commission's procedures for promulgating Trade
Regulation Rules under Section 18 of the FTC Act in line with the
statute's requirements. These changes reflect the Commission's serious
appreciation of its statutory obligation to ``avoid unnecessary costs
or delay'' \1\ in those proceedings and our commitment to using all of
our available tools robustly to protect consumers from the unfair and
deceptive tricks and traps they face in our modern economy.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 57a(c)(2).
---------------------------------------------------------------------------
I. Background
The mandate of the Federal Trade Commission is to address ``unfair
or deceptive acts or practices'' and ``unfair methods of competition''
in or affecting commerce. In 1975, Congress passed the Magnuson-Moss
Warranty--Federal Trade Commission Improvement Act \2\ laying out
specific procedures for the promulgation of ``Trade Regulation Rules''
to protect consumers in a dynamic and changing economic landscape.
Indeed, the Commission rightfully responded to this grant of authority
by initiating more than a dozen rulemakings in the few months and years
after its passage.\3\ Yet, in the intervening decades, we have nearly
abandoned using Section 18 rulemaking as it was intended: To provide a
participatory, dynamic process for setting out clear conduct rules for
industry. The change in approach began in the early 1980s amid a broad
deregulatory wave, including at the Commission. The Federal Trade
Commission Improvements Act of 1980 instituted some lasting revisions
around the edges of FTC rulemaking, including adding a requirement to
issue an Advance Notice of Proposed Rulemaking (ANPRM) before
initiating rulemaking.\4\ However, the true and lasting changes to the
FTC were self-imposed limitations through bureaucratic organization.
---------------------------------------------------------------------------
\2\ Public Law 93-637, 88 Stat. 2183 (1975).
\3\ Though few of the Trade Regulation Rules from that initial
burst of Section 18 activity have survived the ensuing deregulatory
backlash, many other TRRs under various FTC authorities have
continued to provide important regulatory guidance on issues of
public concern. Among those are: The Negative Option Rule (16 CFR
part 425); the Franchise Rule (16 CFR part 436); the Business
Opportunity Rule (16 CFR part 437); the Credit Practices Rule (16
CFR part 444); the Funeral Rule (16 CFR part 453); and the Eyeglass
Rule (16 CFR part 456).
\4\ Public Law 96-252, Section 8(a)(3).
---------------------------------------------------------------------------
The FTC of the 1980s sought to radically reduce the agency's
rulemaking capacity. A fundamental part of that posture are the agency-
promulgated rules of practice. Parts 0 and 1 of these rules shape
Commission behavior and process for Section 18 rulemaking. The
imposition of requirements beyond what Congress provided in statute has
led to the widespread belief among some commentators and policymakers
that Section 18 rulemaking is too difficult to address many of the
unfair and deceptive practices prevalent in the economy today.
II. Changes to the Rules of Practice
These changes to the rules of practice realign Commission practice
with our statutory requirements and remove those extraneous and onerous
procedures that serve only to delay Commission business. These
streamlined Section 18 rules still provide far greater transparency,
process, and opportunity for the public and businesses alike to be
heard than APA notice-and-comment rulemaking procedures.
These changes include providing the Commission with greater
accountability and control over Section 18 rulemaking including
deciding the final list of disputed material facts to be resolved,
deciding who will make oral presentations to the Commission and who
will cross examine or present rebuttals submissions. The chair will now
either serve as or designate the Chief Presiding Officer and the
Commission will ensure orderly conduct for those rulemakings.
Previously, the Chief Administrative Law Judge was designated as Chief
Presiding Officer in Part 0, which reinforced the myth that Section 18
rulemakings required elaborate, interminable judicial processes instead
of straightforward public participation. Additionally, these
streamlined
[[Page 38552]]
provisions allow Commission to designate disputed issues of material
fact earlier in the rulemaking proceeding with the issuance of the
Notice of Proposed Rulemaking (NPRM) and avoid delaying proceedings
with unrelated matters late in the process.
These procedures also enhance Commission transparency by requiring
that records of both written and oral communications to a Commissioner
or their advisors during a rulemaking proceeding will be placed in the
rulemaking record and be available to the public.
The revised rules respect the underlying statutory requirements of
Section 18 that provide ample transparency and opportunity for public
participation in the promulgation of Trade Regulation Rules. These
requirements include: The publication of an ANPRM for comment; the
advance submission of the ANPRM to our congressional oversight
committees; the publication of an NPRM; the advance submission of the
NPRM to the congressional committees; an informal hearing to resolve
any disputed issue of material fact; and publication of a final rule
accompanied by a statement of basis and purpose.\5\ These statutory
guidelines provide for substantially greater public engagement and
congressional oversight than the Administrative Procedure Act, under
which most federal rulemaking is conducted. The Commission's rules of
practice should--and now do--adhere closely to this statutory
framework.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 57a.
---------------------------------------------------------------------------
III. Conclusion
Revitalizing the Commission's ability to issue timely Trade
Regulation Rules under Section 18 will provide much needed clarity
about how our century-old statute applies to contemporary economic
realities and will allow the FTC to define with specificity what acts
or practices are unfair or deceptive under Section 5 of the FTC Act.
Prospective trade rules will give businesses and consumers concrete
guidance about their responsibilities and rights. Importantly the
Commission will be able to exercise its prosecutorial discretion to
seek a wide variety of relief, including redress, civil monetary
penalties, reformation of contracts, and other relief, against first-
time violators of Trade Regulation Rules under Section 19 of the FTC
act. While rulemaking is no substitute for a permanent fix to our
Section 13(b) authority to obtain monetary relief, trade rules can help
ensure businesses will no longer be able to take advantage of consumers
and cement their market position by engaging in practices that do
people real harm until we catch them and take them to court the first
time.
Self-imposed red tape has only created uncertainty and delay for
the important business of this Commission. The imposition of those
requirements decades ago was the FTC's signal to the business world
that the brief era of Section 18 rulemaking had come to an end. With
the adoption of these streamlined procedures we wish to signal a change
in Commission practice and ambition: We intend to fulfil our mission to
protect against unfair and deceptive practices in commerce and provide
consumers and businesses with due process, clarity, and transparency
while crafting the rules to do so.
Dissenting Statement of Commissioner Christine S. Wilson
Regulations, even well-intentioned ones, impose costs that stifle
innovation, raise the costs of doing business, limit consumer choice
and increase the prices that consumers must pay, and ultimately
undercut America's global competitiveness.\1\ Congress empowered the
FTC to issue trade regulations when it passed the Magnuson-Moss Act.\2\
At the same time, it imposed significant procedural obligations on the
Commission to cabin the agency's broad rulemaking discretion.
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\1\ I have issued several statements discussing this previously.
See Regulatory Review of Safeguards Rule, Dissenting Statement of
Commissioner Noah Joshua Phillips and Commissioner Christine S.
Wilson (Mar. 5, 2019), available at https://www.ftc.gov/system/files/documents/publicstatements/1466705/reg_review_of_safeguards_rule_cmr_phillips_wilson_dissent.pdf;
Notice of Proposed Rulemaking: Energy Labeling Rule, Dissenting
Statement of Christine S. Wilson (Dec. 10, 2018), available at
https://www.ftc.gov/system/files/documents/publicstatements/1433166/2018-12-7_statement_of_c_wilson_energy_labeling.pdf.
\2\ Magnuson-Moss Warranty Act, Public Law 93-637, 88 Stat.
2183.
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In the wake of the Magnuson-Moss Act, the agency engaged in a
flurry of rulemaking activity that sought to regulate broad swaths of
the economy.\3\ The negative reaction from businesses and many in
Congress was swift. During this period, the Washington Post famously
accused the agency of attempting to be the ``national nanny.'' \4\
Congress found that the agency's rulemaking efforts were filled with
``excessive ambiguity, confusion, and uncertainty.'' \5\ Backlash from
the agency's sweeping regulatory efforts of the late 1970s culminated
in the Federal Trade Commission Improvements Act of 1980, which imposed
additional procedural obligations on Section 18 rulemaking efforts.\6\
In other words, Congress sought to cabin the agency's discretion even
more in what famed legal scholar Earnest Gellhorn characterized as
``The Wages of Zealotry.'' \7\
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\3\ I have described some of these rulemaking initiatives in
recent statements. See Notice of Proposed Rulemaking for the Energy
Labeling Rule, Dissenting Statement of Commissioner Christine S.
Wilson (Dec. 22, 2020), available at https://www.ftc.gov/system/files/documents/public_statements/1585242/commission_wilson_dissenting_statement_energy_labeling_rule_final12-22-2020revd2.pdf; Advance Notice of Proposed Rulemaking for
Regulatory Review of the Amplifier Rule, Concurring Statement of
Commissioner Christine S. Wilson (Dec. 17, 2020), available at
https://www.ftc.gov/system/files/documents/public_statements/1585038/p974222amplifierrulewilsonstatement.pdf.
\4\ The FTC as National Nanny, Wash. Post (Mar. 1, 1978),
https://www.washingtonpost.com/archive/politics/1978/03/01/the-ftc-as-national-nanny/69f778f5-8407-4df0-b0e9-7f1f8e826b3b/.
\5\ S. Rep. No. 96-500, at 3 (1979).
\6\ Federal Trade Commission Improvements Act of 1980, Public
Law 96-252, 94 Stat. 374.
\7\ Ernest Gellhorn, The Wages of Zealotry: The FTC Under Siege,
4 Regulation 33 (1980).
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Considering the backlash to this agency's earlier era of unbounded
rulemaking activity, I am gravely concerned about today's proposals to
pare down procedural safeguards embedded in our rules of practice
related to Section 18 rulemaking. I want to thank Commissioner
Slaughter for her transparency in explaining the materials included in
the Commission's Section 18 rule proposal. Making this kind of
information available to the public helps to foster the public's
understanding of our proposal and also creates an opportunity for more
open dialogue. Considering the proposal outlined by Commissioner
Slaughter today, I would find it constructive to discuss a number of
questions.
First, with respect to the objective management of the rulemaking
process: The role of a Presiding Officer is to oversee the fair
adjudication of the hearing process and make independent
recommendations to the Commission based on relevant and material
evidence. During the 1970s rulemaking spree, the Presiding Officer was
viewed as a puppet of agency management, leading to the perception that
outcomes were biased and predetermined. To address this issue and build
trust in the rulemaking process, Congress imposed obligations designed
to ensure the independence of the Presiding Officer.\8\ The Commission,
heeding Congressional concerns regarding independence, required the
Chief Administrative Law Judge to serve as the Chief Presiding Officer
and
[[Page 38553]]
empowered the Presiding Officers to lead the hearing process.
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\8\ Federal Trade Commission Improvements Act of 1980, Public
Law 96-252, 94 Stat. 374.
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In light of these Congressional concerns, why does today's
proposal move away from using independent ALJs as Presiding Officers?
How can we avoid public perception that the Commission is politicizing
the rulemaking process if the Chair appoints the Presiding Officer?
How can we preserve the independence of the Presiding
Officer if the Commission, not the Presiding Officer, decides which
issues will be discussed at the hearing and which parties will be
permitted to testify, conduct cross-examination, and offer rebuttal
evidence?
How can the Commission ensure we get a neutral and
thorough accounting of evidence and data instead of a cherry-picked
record that serves an agenda?
Under the revised rules, the Commission, not the Presiding
Officer, will determine the list of disputed issues of material facts.
How can stakeholders ensure that their proposed factual disputes will
be part of the rulemaking record if their input is out of step with the
majority view of the Commission?
Second, with respect to procedural limitations that impact public
understanding and opportunities for input: The rule revisions remove
self-imposed restrictions I view as deliberate choices by this agency
to comply not just with the letter of our Congressional mandate but the
spirit of the law. Following our rulemaking spree in the 1970s, the FTC
was stripped of funding, stripped of legal authorities, and required to
institute new and substantial rulemaking steps to foster public trust
in our trade rules.\9\ Recognizing this agency was on the brink of
being shuttered, our rules of practice adopted a number of rulemaking
procedures that provided for additional public comment periods,
publication of a staff report, and multiple opportunities for the
public to weigh in on disputed issues of material fact. While the
procedures as revised may comply with the statute as drafted, I support
the FTC's existing approach that provides for robust additional public
input.
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\9\ Id. See also J. Howard Beales III, The Federal Trade
Commission's Use of Unfairness Authority: Its Rise, Fall, and
Resurrection, 22 J. Pub. Pol'y & Mktg. 192 (2003).
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If the agency is preparing to remove discretionary steps
from our rulemaking process, are we concerned the more limited process
will fail to identify unintended consequences of proposed rules,
particularly those that could harm small businesses and marginalized
communities?
Is the Commission concerned that the public will view the
more limited opportunities to comment on proposed rules as running
counter to the democratic rationales for rulemaking my colleagues have
previously espoused?
Additionally, rulemaking efforts are enhanced when the public has
the input from expert staff at agencies overseeing the rulemaking
process. The FTC has built transparency into our rules of practice by
requiring that rulemaking staff publish a staff report containing their
analysis of the rulemaking record and recommendations as to the form of
the final rule. But the new rules eliminate the staff report
requirement.
Considering the value of staff reports, how will the
Commission build trust in the enforcement of new trade rules without
transparency into staff's recommendations?
In what ways will the public's understanding of any final
rules suffer because the Commission will no longer publish a report
from expert FTC staff highlighting key issues and formulating
recommendations based on the record?
The Commission's proposal to revise its rules of practice related
to Section 18 rulemaking procedures is not a small adjustment enacted
to improve efficiency. These changes have the potential to usher in a
return to aggressive, unbounded rulemaking efforts that could transform
entire industries without clear theories of law violations and
empirical foundations for recommended regulatory burdens. Even as we
speak, Congress is considering bills that run the gamut from giving the
FTC expansive new authority and resources to eliminating the agency's
jurisdiction. In the midst of so much criticism and scrutiny from so
many angles regarding so many aspects of our jurisdiction, why are we
embarking on this path of revisiting an era that led to such
significant constraints on our jurisdiction?
As the saying goes, if you don't acknowledge the mistakes of the
past, you are doomed to repeat them. One striking example of this
disregard for history can be found in the House Judiciary Committee's
Majority Staff Report, which 12 different times points to railroad
regulation as a model for Big Tech.\10\ In a stunning omission, nowhere
in its 450 pages or 2,500 footnotes does the report mention the fact of
the bipartisan repeal of this regulatory framework because it harmed
consumers and stifled innovation; neither does it mention the benefits
that came from deregulation.\11\
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\10\ For other reactions to the Majority Staff Report, see
Christine S. Wilson, Remarks for American Bar Association Webcast,
Interview with Commissioner Wilson and Barry Nigro on the House
Judiciary Report, (Nov. 13 2020), https://www.ftc.gov/system/files/documents/public_statements/1588040/aba_interview_with_commissioner_wilson_on_the_house_judiciary_report.pdf and Christine S. Wilson, Remarks for the 2020 Global Forum on
Competition, (Dec. 7 2020), https://www.ftc.gov/system/files/documents/publicstatements/1589376/wilson-oecd-2020remarks.pdf.
\11\ See Majority Staff Of H. Comm. On The Judiciary, 116th
Cong., Investigation Of Competition In Digital Markets 7 (2020),
https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf at 380 (``In the railroad
industry, for example, a congressional investigation found that the
expansion of common carrier railroads into the coal market
undermined independent coal producers, whose wares the railroads
would deprioritize in to give themselves superior access to markets.
In 1893, the Committee on Interstate and Foreign Commerce wrote that
`[n]o competition can exist between two producers of a commodity
when one of them has the power to prescribe both the price and
output of the other.' Congress subsequently enacted a provision to
prohibit railroads from transporting any goods that they had
produced or in which they held an interest.''); id. at 382 (``The
1887 Interstate Commerce Act, for example, prohibited discriminatory
treatment by railroads.''); id. at 383 (``Historically, Congress has
implemented nondiscrimination requirements in a variety of markets.
With railroads, the Interstate Commerce Commission oversaw
obligations and prohibitions applied to railroads designated as
common carriers''); see also Christine S. Wilson & Keith Klovers,
The growing nostalgia for past regulatory misadventures and the risk
of repeating these mistakes with Big Tech, 8 J. Antitrust
Enforcement 10, 12-14 (2019), https://academic.oup.com/antitrust/article/8/1/10/564371 (discussing the benefits from dissolving the
ICC).
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There are many at the FTC who lived through the 1970s and 1980s and
experienced the public and Congressional backlash during those dark
days of the agency's history. There are many others who worked with and
learned from those who lived through that period. Current management
would be wise to seek their guidance.
[FR Doc. 2021-15313 Filed 7-21-21; 8:45 am]
BILLING CODE 6750-01-P
