FEDERAL TRADE COMMISSION
P.L. 96-252
FEDERAL TRADE COMMISSION IMPROVEMENTS
ACT OF 1980
P.L. 96-252, see page 94 Stot. 374
ittee)
House Report (Interstate and Foreign Commerce Comm
2313]
H.R.
pany
accom
[To
79
No. 96-181, May 15,19
Committee)
Senate Report (Commerce, Science, and Transportation
1020]
S.
No. 96-184, May 15,1979 [To accompany
Committee)
Senate Report (Commerce, Science, and Transportation
1991]
S.
pany
accom
[To
No. 96-500, Dec. 14,1979
House Conference Report No. 96-917, May 1,1980
[To accompany H.R. 2313]
Cong. Record Vol. 125 (1979)
Cong. Record Vol. 126 (1980)
" DATES OF CONSIDERATION AND PASSAGE
House November 27,1979; May 20,1980
T Senate February 7, May 21,1980
:
after amending
The House bill was passed in lieu of the Senate bills
e bills. The
Senat
the
of
text
the
of
much
in
its language to conta
ConferHouse
Senate Reports (this page and page 1102) and the
ence Report (page 1143) are set out.
SENATE REPORT NO. 96-184
[page 1] . ,
tion, to which
The "Committee on Commerce, Science, and Transporta
ons for the
priati
appro
rize
autho
*tfo
102Q)
(S.
was referred the bill
reports
same,
the
dered
Federal Trade Commission, having consi
bill
the
that
s
mend
recom
and
t
dmen
amen
favorably thereon without
do pass.
PURPOSE
on for apThe purpose of this legislation is to provide authorizati
legislaThe
).
(FTC
ission
Comm
propriations to the Federal Trade
year
fiscal
for
n
millio
$72.5
d
priate
appro
be
to
rize
tion would autho
year
fiscal
for
n
millio
$82
and
1980, $78 million for fiscal year 1981,
1982.
SUMMARY AND DESCRIPTION
created in 1914: and
The Federal Trade Commission was originallying
the marketensur
has historically been charged by law with practicesthat
practices
by
or
itive
mpet
antico
by
place is not distorted
cement
enfor
ises
exerc
which are unfair or deceptive. The Commission
have
which
of
16
acts,
ate
separ
27
under
rity
and administrative autho
of
iption
descr
brief
and
been enacted since 1973. (For a complete listreport.)
the
ing
follow
dix
these statutes see the appen
1073
LEGISLATIVE HISTORY
P.L. 96-252
those groups representing broad membership or specific expertise are
eligible for participation.
.
JOHN C. DANFORTH.
[page 18]
ADDITIONAL VIEWS OF MESSES. SCHMITT AND
GOLDWATEK
The broad legislative mandate given to the Federal Trade Commission by Congress makes the passage of legislative veto legislation essential. The FTC Act merely provides that "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or
practices in or affecting commerce, are hereby declared unlawful."
Considering that rules of the Commission may apply to any act or
practice "affecting commerce", and that the only statutory restraint
is that it be unfair, the apparent power of the Commission with respect
to commercial law is virtually as broad as the Congress itself. In fact,
the Federal Trade Commission may be the second most powerful legislature in the country. The FTC claims the power to declare any commercial act, practice or commission to be "unfair", regardless of state
law, and thereby to amend all state statutes and reverse all state cases
which may.be inconsistent with its declaration. All 50 State legislatures and State Supreme Courts can agree that a particular act is
fair and lawful, but the five-man appointed FTC can overrule them all.
The Congress has little control over the far-flung activities of this
agency short of passing entirely new legislation. Because of the time
and uncertainty involved in action on a bill which addresses a specific
agency action, this approach is not an effective means of dealing with
the many and diverse regulatory activities of the FTC. What is needed
is a systematic procedure for the Congress to express its will with regard to specific regulatory initiatives;'', '
The legislative veto fulfills this need.
It is important to point out that an appropriately designed legislative veto if applied to the FTC would not require the Congress to
review every rule promulgated by that agency. This would be both
impractical and undesirable. The legislative veto would simply provide an improved and efficient opportunity for congressional review
and. when it is deemed necessary, possible disapproval of a proposed
or existing rule..COXSTITUTIONALITY
Several objections have been raised to providing Congress with the
use'of this power. The most frequent is the claim that the legislative
veto is unconstitutional. It is clear, however, that if it were unconstitutional, we would surely knoAv it by now: since 1932, Congress has
enacted over 295 provisions of law witli legislative review or veto
powers. On those occasions where the veto has been challenged in court,
it has not been ruled unconstitutional.
In Atkins v. United States, 556 F. 2d 1028 (Ct. Cl. 1977), 140 Federal judges challenged the constitutionality of the congressional veto
provision contained in the Federal Salary Act, 2 U.S.C. 351 et seq.
1088
FEDERAL TRADE COMMISSION
P.L. 96-252
[page 19]
ns
Under that provision, all or part of the Presidential recommendatio
rates
branch
l
judicia
and
ive
legislat
to Congress regarding executive,
of pay become effective automatically within % specified time unless
neither House of the Congress lias enacted legislation which specifically disapproves all or part of such recommendations . . .
The Senate exercised its prerogative under section 359(1) (B) and
passed a disapproving resolution. The judges argued that one-House
1,
veto was unconstitutional because it violated: first, article I, section ss
Congre
in
States
United
the
of
ity
author
ive
legislat
which vests the
us a body and not in one House alone; second, article I, section 7, which
reserves to the President the power to veto every order, resolution, or
third,
vote to which the concurrence of both Houses is necessar}*;, and which
1.
section
II.
article
and
.powers
of
ion
separat
of
the principle
vests, all executive power in the President.
The Court of Claims rejected each of these contentions. The principle of bicameralism is not violated, it ruled, because rejecting Presidential rec6mmendation to increase or decrease salaries is a form of
legislative activity which does not require the affirmative concurlaw
rence of both Houses since the effect of such action is not to make tion
usurpa
not
is
there
ly,
Similar
quo.
status
the
e
preserv
to
"but rather
of the Presidential veto power since the Chief Executive had his oppore; and,
tunity to veto the creation of the mechanism in the first instanctionally
constitu
not
is
Houses
in any event, the concurrence of both
necfssary where only Presidential recommendations are involved.
Finally, the court held that the doctrine of separation of powers was
not being infringed. It noted that the Constitution nowhere dictates
a strict compartmentalizatiori of powers between brandies. What the
Constitution seeks to avoid is the accumulation of too much of all
powers in one branch. It. further noted that paysettinc is basicallyn-a
legislative function. In this instance, the function has been conditio
ally delegated to the executive. 'Such delegation does not irrevocablyn
commit authority to the executive because jn exercising the functio
the executive merely acts as an a^ent of the Congress. The legislature
retains the right of supervision oj^oversight. The particular legislative
veto in question does not seek to/enforce any law or appoint any agents
to enforce the law and thus does not call upon the legislature to admina
ister the law?. It is. therefore, a device used in aid of legislation oned
conclud
court
The
power.
ive
legislat
th«
matter historically within
on a practical note, emphasizing that the legislative veto is an appropriate response to the changing circumstances of modern government:
We end this part III of the opinion by reiterating that the oneHouse veto present in the Salary Act is a device, authorized by article
I, section 1, coupled with the necessary and proper clause, and that
it contravenes neither the broad principle of the separation of powers
nor any specific provision of the Constitution. In particular, we note
that the necessary and proper clause, which has sanctioned the massive
delegation; of legislative functions over the past century, provides
a firm grounding for this legislative veto. Congress plainly felt the
to
need for this veto device, instead of relying-solely on the power In
statue.
fledired
full
a
by
ns
endatio
recomm
ential
'presid
e
overrid
the
MoCulloch's .phrases, Congress exercised "its best judgment" in ion
legislat
its
modate
"accom
to
sought
and
e
measur
this
of
selection
1089
LEGISLATIVE HISTORY
P.L. 96-252
[page 20]
to circumstances." In the world of reality, the mechanism, as we have
underscored, was a fair substitute for full bicameral concurrence, did
not materially invade the Executive's own sphere, and took' due account of the limited presidential participation. It was a permissible accommodation of competing interests, reflecting both on appropriate
check by Congress upon the Executive and some check by the Executive upon the action which could be taken by one House alone. To borrow the Supreme Court's language, some 50 years ago, in upholding
congressional delegation, this particular one-House veto seems to us
to pass the test of "common sense and the inherent necessities of the
governmental coordination." Hampton & Co. v. United States, supra,
276U.S.at406.
The recent Supreme Court decision in Buckley v. Valeo, 424 U.S.I1
(1976), provided an opportunity for the Court to address the legis;
.
lative veto.
While the full Court did not decide the case on the basis of the legislative veto. Justice White in his separate opinion expressed the attitude in dicta that it is constitutional: I am also of the view that the
otherwise valid regulatory power of a properly created independent
agency is not rendered constitutionally infirm, as violative of the President's veto power, by a statutory provision subjecting.agency regulations to disapproval by either House of Congress. For a bill to become
law, it must pass both Houses and be signed by the President or be
passed over his veto. Also, "Every Order, Resolution, or Vote to which
the Concurrence of the Senate and House of Representatives may be
necessary . . ." is likewise subject to the veto power ("U.S. Constitution, Art. I, § 7, cl. 3). Under § 438 (c) the FEC's regulations are subject to disapproval but for a regulation to become effective, neither
House need approve it, pass it, or take any action at all with respect
to it. The regulation becomes effective by non-action. This no more
invades the President's power than does a regulation not required to
be laid before Congress. Congressional influence over the substantive
content of agency regulation may be enhanced, but I would not view
the power of either House to disapprove as equivalent to legislation
or to an order, resolution or vote requiring the concurrence of both
/
Houses. Buckley, 284, 285.
If the actions of the FTC are to become consistent with congressional
intent, if its rejirulatory activities are to beconj^subject to the will of the
people as expressed through their elected'representatives, then Congress must act to provide for congressional review and possible disapproval of proposed and existing FTC rules.
The legislative veto has a long history. Since 1933, Congress has onacted over 200 statutes containing legislative review, approval or disapproval of proposed Executive action. A summary of these statutes
follows these views as exhibit A.
In the 95th Congress, the House of Representatives passed an FTC
authorization bill providing for a mechanism for the disapproval of
proposed FTC rules. The Senate did not act on a similar provision.
The Conferees twice returned a Conference Report to the House which
did not contain a legislative veto. On both occasions, it was rejected.
The result was that there was no FTC authorization bill in the 95thCongress.
1 96 S.Ct. 612, 46 L,.Ed.2d 659.
1090
FEDERAL TRADE COMMISSION
P.L. 96-252
[page 21]
In the current Congress, the House Committee on Interstate and
Foreign Commerce has included a legislative veto provision in the
FTC authorization bill. In the Senate, Senator Tower and several
other Senators introduced S. 193. a bill to amend the FTC Act to provide for possible legislative veto of proposed FTC rules. In light of
these actions, it is all the more important for the Senate to give the
questions raised by the legislative veto careful attention before acting
on the FTC authorization bill.
HARRISON H. SCHMITT.
BARRY GOLDWATER.
EXHIBIT A
CONGRESSIONAL EEVIEW DEFFERAL AXD DISAPPROVAL OF AGENCY
ACTIONS
A SUMMARY AND INVENTORY OF STATUTORY AUTHORITY OF 295 CONGRESSIONAL REVIEW PROVISIONS IN 196 LAWS ENACTED SINCE 1933
CONGRESSIONAL KEVIEW ACTS LISTED CHRONOLOGICALLY 1932-1975
PUBLIC LAWS
Legislative Appropriations for Fiscal Year 1933 (Public Law 72212).
,
."'...
Appropriations for Treasury and Post Office for Fiscal Year 1934
(Public Law 72-428). _
Charges for Irrigation on Indian Reservation Projects, 1936 (Public Law 74-742) .
Reorganization Act of 1939 (Public Law 76-19).
Neutrality Act of 1939 (54 Stat. Ch. 2. P/Res. 54) .
Alien Registration Act of 194tf /Public Law 76-670) .
Act to Promote Defense of,jt,M United States (Public Law 77-11).
Emergency Price Control A6t (Public Law 77-421).
Emergency Price Control Act Amendment (Public Law 77-729).
War Labor Disputes Act (Public Law 78-89) .
Navy Public Works Construction Authorization, 1944 (Public Law.
78-289).
Naval Petroleum Reserve Amendment (Public Law 78-343).
Federal- Aid Highway Act of 1944 (Public Law 78-520) .
Reorganization Act of 1945 (Public Law 79-263).
Federal Airport Act of 1 946 (Public Law 79-377) .
Strategic Materials Stockpiling Act Amendments, 1946 (Public Law
79-520).
Disposal, of Surplus Vessels and other Naval Property, 1946 (Public Law 79-649).
Assistance to Greece and Turkey, 1947 (Public Law 80-75).
Displaced Persons Act of 1948 (Public Law SI-774).
Immigration Act Amendment of 1948 (Public Law 81-864) .
Long-Range Proving Ground for Guided Missiles, 1949 (Public
Law 81-60).
Reorganization Act of 1949 (Public Law 81-109) .
1091
LEGISLATIVE HISTORY
P.L. 96-252
[page 32]
27. Presidential Records Act of 1978 (92 Stat 2523; Public Law
$5-591; approved November 4,1978).
28. Nuclear Regulatory Commission Authorization Act of 1978
(92 Stat. 2947; Public Law 95-601; approved November 6, 1978).
29. Rehabilitation. Comprehensive Services, and Developmental
Disabilities Amendments of 1978 (92 Stat. 2955; Public Law 95-602;
approved November 6,1978).
30. Uranium Mill Tailings Radiation Control Act of 1978 (92
Stat. 3021; Public Law 95-604; approved November 8, 1978).
31. National Parks and Recreation Act of 1978 (92 Stat. 3467;
Public Law 95-625; approved. November 10,1978).
32. Public Utility Regulatory Policies Act of 1978 (92 Stat. 3117;
Public Law 95-617: approved November 9,1978).
33. Health Services Research, Health Statistics and Health Care
Technology Act of 1978.
34. Department of Justice Appropriation Authorization Act, fiscal
year 1979 (92 Stat. 3459; Public Law 95-624; approved November 9,
1979).
35. Health Services and Centers Amendments of 1978 (92 Stat.
3551; Public Law 95-626; approved November 10, 1978).
36. Pennsylvania Avenue Development Corporation Act of 1972
Amendment (92 Stat. 3635; Public Law 95-^629; approved November 10,1978).
37. Financial Institutions Regulatory and Interest Rate Control
Act of 1978 (92 Stat. 3641; Public Law 95-630; approved November 10,1978).
38. Consumer Product Safety Act Amendment (92 Stat. 3742;
Public Law 95-631; approved November 10,1978). .
I ';
/
SENATE REPOR^xNO. 96-500
•>f *
[page 1]
The Committee on Commerce,'Science, and Transportation, to which
was referred the bill (S. 1991) to amend the Federal Trade Commission Act to change procedures for agency adjudications and rulemaking, to extend authorizations for appropriations for the Federal Trade
Commission, and for other purposes, having considered the same, reports favorably thereon with an amendment in the nature of a substitute and an amended title and recommends that the bill do pass.
PURPOSE
The purpose of this legislation is to amend the Federal Trade Commission Act to change procedures for agency investigations and rulemaking, and to extend authorizations for appropriations for the Federal Trade Commission (FTC). The legislation would authorize to be
appropriated $70 billion for fiscal year 1980, and $75 million for fiscal
year 1981.
BACKGROUND AND NEED FOR THE LEGISLATION
The Federal Trade Commission was originally created in 1914 and
has historically been charged by law with insuring that the market1102
j
FEDERAL TRADE COMMISSION
P.L. 96-252
Public Law
t of 1978
' 6, 1978).
velopmental
L,a\v 95-602;
E 1978 (92
1978).
Stat. 3467;
! Stat. 3117;
lealth Care
a Act, fiscal
November 9,
(92 Stat.
i.
Let of 1972
7ed Novemite Control
red NovemStat. 3742;
)n, to which
le Commisid rulemakleral Trade
ic same, reof a substipass.
Frade Cornis and rulebr the Fedhorize to be
m for fiscal
in 1914 and
the market-
place is not distorted by anti-competitive practices or by practices
which are unfair or deceptive. In the recent past, the FTC has come
under attack for embarking upon rulemaking proceedings which have
[page 2]
aroused considerable criticism. In order to evaluate the validity of this
criticism, the Consumer Subcommittee held 8 days of oversight hearings and heard from more than 50 witnesses. The hearings focused on
consumer protection activities, principally on controversial investigatory and rulemaking proceedings.
The oversight hearings demonstrated that in many instances the
FTC had taken actions beyond the intent of Congress. A few examples of these actions illustrate and underline the basis for the Committee's legislative proposals.
In 1975 Congress by law instructed the FTC to initiate an investigation of used car sales practices. The Commission was authorized
to address abuses in connection with the sale of used cars including a
requirement that if a used car was sold without a warranty that this
fact should be made known to consumers. Notwithstanding the intent
of Congress that the used car rulemaking authority did not include authority to require a warranty for used cars, the FTC staff proposed
a rule requiring mandatory inspections with the result that the information disclosed as a result of any inspection would create a warranty under state law. Even the Commission's own director of the
Bureau of Consumer Protection, Mr. Albert Kramer, concluded that a
more restricted rule not requiring mandatory inspections was moire
consistent with congressional intent.
Therefore, the "Committee has adopted an amendment which clarifies Commission authority in this area. This proposal is consistent with
the Commission's recent action regarding this rulemaking.
In another case, the Commission apparently endorsed a broad and
virtually unbounded definition of "unfairness" in the Federal Trade
Commission Act in initiating the children's television advertising
.
proceeding. The FTC staff report stated:
unfairness * * * arises out 6i uie striking imbalance of sophistication and power between well-financed adult advertisers, on one hand, and children on the other, many of whom
are too young to even appreciate what advertising is.
FTC staff report on Television Advertising to Children (February
1978). The problem with this overly broad concept of "unfairness"
is that, taken to its logical conclusion, the money and sophistication
of every major advertiser could be considered unfair because of the
difference in sophistication and economic power between such a company and the average consumer.
Coupled with the troublesome and overbroad theory of "unfairness"
was the problem created by the fact that the Commission never proposed a specific rule to be considered during the hearing phase of the
children's rule. Rather the Commission simply noted the Staff proposals which included a total ban on all children's advertising, and indicated that thejr would be among the remedial actions to be considered.
This lack of notice of a specific rulemaking proposal was noted by the
Court of Appeals in Association of National Advertisers, Inc. v. Fed­
eral Trade Commission, No. 79-1030, at 12 (B.C. Cir. Oct. 2,1979).
1103
LEGISLATIVE HISTORY
P.L. 96-252
The Court stated:
The ability of parties to generate disputes and hence trigger the quasi-adjudicative features of Section 18 depends,
under the special rules for the children's advertising proeeed[page 3]
ing, on the ability of participating parties to guess in advance
of the legislative hearing what the likely presentations will
be. And this guessing game is rendered more difficult "by the
fact that the children's advertising Notice does not reveal
what Rule the Commission proposes to promulgate. (Italic
added).
The bill, therefore, requires that the present children's proceeding
be terminated, and that all future rulemaking proceedings regarding
commercial advertising be brought in accordance with a "false or deceptive" standard. Moreover, requiring publication of a specific rule,
including alternatives, will in addition to providing better notice to
participants,1 require the Commissioners to more carefully weigh the
relationship between the alleged unlawful conduct and the proposed
remedy. Such review might cause the Commission to redefine the proposed rule; at least it will assure the parties the options have been
carefully analyzed.
The' FTC has also initiated a rulemaking proceeding called the
Standards and Certification Trade Regulation Rule. The United
States has a system of voluntary standards and certification through
which manufacturers, users and other parties set the size, quality,
safety and performance standards for goods and materials. Standards
setters set the standards and certifiers, e.g., Underwriters Laboratories
certify that a product or material meets a standard.
Because of allegations that standards groups had on occasion excluded goods from the market by imposing unreasonably high standards, or approved standards providing insufficient 'levels of safety,
Federal Trade Commission proposed a^far reaching trade regulatithe
on
rule intended to prevent these alleged ^abuses. The rule imposed extensive notice, intervention and appeal requirements on standards
groups, and attempted to define supstantive criteria for establishing
standards.
The Committee agrees with the Federal Trade Commission that the
voluntary standards system has deficiencies and that unjustified decisions do occur from time to time. However, the Committee strongly
disagrees with the idea that a trade regulation rule is the proper
method for addressing these problems, since the cases cited in the
staff report did not indicate a ''pattern" of violations. There are
quate remedies available through the antitrust laws to remedy adeunjustified exclusion of products. (In the recent Hydrolevel case the
trial court awarded $7.5 million as treble damages), and the Commission itself brought an action involving a deficient safety standar
d
(fire danger from plastic foam insulation). Therefore, the Committee
has proposed an amendment to the FTC Act that would terminate
the standards proceeding.
The Magnuson-Moss Warranty-Federal Trade Commission Improvement Act passed in early 1975 gave the Commission the authority to issue industry-wide rules. Since the passage of this statute,
1104
"-4
FEDERAL TRADE COMMISSION
P.L. 96-252
there has been excessive ambiguity, confusion and uncertainty in
some of these proceedings. This was amply documented in a special
project study of the Administrative Conference of the United States
which was made pursuant to a mandate in the Magnuson-Moss Act
and presented to the Committee during its oversight hearings.
[page 4]
In order to minimize these problems of confusion and contention
with respect to the basis and scope of trade regulation rules, the Committee has proposed certain procedural refinements.
First is a requirement of advance notice of proposed rulemaking,
to be published in the Federal Register, giving a brief description of
the area of inquiry, the objectives the Commission seeks to achieve
and the possible regulatory approaches under consideration. Thirty
days before the initial notice of proposed rulemaking is published the
Commission is required to report that intent to the appropriate congressional oversight committees.
The initial notice of proposed rulemaking must set forth the text
of the proposed rule, including alternatives. The Commission failed
to do this in the case of the proposed rule on children's TV advertising.
The bill also sets forth a requirement for a regulatory analysis by
the FTC for each proposed and final rule issued by it. This amendment would require the FTC to publish an analysis of rulemaking
options, including an assessment of the benefits and adverse effect
of any proposed rule and its alternatives.
The Committee is concerned about allegations that the Commission
and the FTC staff have been inaccessible to meet outside parties.
S. 1991, as reported, makes statutory the Commission's rules governing ex parte contracts between the Commissioners and outside parties
and also requires those meetings to be noticed in advance in a weekly
calendar. Because of the lack of any restrictions on meetings between
the Commissioners and the rulemaking staff, the bill also requires any
such meetings to be "on-the-record."
The bill also makes some modifications in the public participation
program. It limits to $50,000 the7 amount a group may receive in any
one proceeding in any one year^ cjjfs the total amount available for the
program, and raises the ceiling on small business funding from 25 to
50 percent.
. The FTC's broad investigatory powers have been retained but moditied to prevent fishing expeditions undertaken merely to satisfy its
"official curiosity." S. 1991 creates a new authority for the use by the
FTC of a civil investigative demand, in consumer protection law enforcement investigations patterned after the authority of the Justice
Department. A civil investigative demand would have to be signed by
a member of the Commission, state the nature of the conduct of the
alleged violation under investigation and the law applicable thereto,
describe the class of documentary material to be producd with definiteness and clarity, and prescribe a reasonable return date.
An additional provision of the bill would eliminate the threat of
criminal sanctions applied to those recipients of a Commission subpoena who in pood faith resist unnecessary investigations by making
such sanctions inapplicable until a court lias acted in enforcement.
1105
LEGISLATIVE HISTORY
P.L. 96-252
The bill would also require the FTC to designate a custodian to be
responsible for the proper handling and safeguarding of investigative
materials, and adopts certain other measures to protect confidential
information submitted during investigations, without, however, limiting the right of the Commission to make such material available to the
Department of Justice or any state law enforcement agency for law
enforcement purposes or to either house of Congress or any congressional committee.
[page 5]
SUMMARY OF BILL
Section 1. Title.—This section is the title of the bill, "The Federal
Trade Commission Act of 1979."
/Section 2. Reconsideration of Orders.—This section requires the
Commission to reopen any order issued under section 5 of the FTC
Act if a person, partnership, or corporation subject to that order files
a request with the Commission stating with particularity the changed
conditions of law or fact that require the order to be altered, modified,
or set aside. Such a request must be considered by the Commission
within 120 days of the date of filing.
Section 3. Disclosure of Commercial or Financial Information—
This section amends section 6(f) of the FTC Act to make explicit tiie
protections to be accorded trade secrets and confidential commercial
and financial information which the Commission obtains from private
sources. Although 6(f) currently prohibits the disclosure of "trade
secrets and names of customers", the Commission has had no statutory
prohibition against disclosure of confidential commercial and financial
information which does not come within the Commission's definition
of "trade secrets".
.
^ Section 4- Confidentiality of Line-of-Business Reports.—Under section 6 of the FT(J Act, the Commission may issue special orders to file
statistical reports such as the Lin4x>f Business Keports. In connection
with the Line of Business RepoWs, Congress, in appropriating funds
for the Commission, has passed three separate restrictions on the Commission's disclosure of this information with the last of these appropriation acts expiring in September of 1977. The purpose of section 4
is to make permanent the protection against disclosure of line-of-business data in such a way that an individual company could be identified.
Section 6. Investigations of Insurance.—Section 5 amends section 6
of the FTC Act. Under the amendment, the FTC's investigative and
reporting powers are made inapplicable to the business of insurance
(except to the extent authorized by section 6(c) and 6(d) relating to
anti-trust investigations). The amendment does not affect the existing
authority of the FTC, under sections 5 and 18 of the FTC Act, to conduct law enforcement investigations or to issue trade regulation rules
to the extent such an investigation or trade regulation rule is consistent
with the McCarran-Ferguson Act.
Section 6. Enforcement Authority.—Section 6 would eliminate the
threat of criminal sanctions applied to those recipients of a subpena
who in good faith resist investigations by making such sanctions inapplicable prior to a judicial order of enforcement.
Section 7. Advertising Rulemaking.—This section would amend the
section 18 rulemaking authority of the FTC Act to provide that the
1106
LEGISLATIVE HISTORY
P.L. 96-252
LINE OP BUSINESS DATA
/Section 4-—Section 4 provides specific procedures to safeguard the
confidentiality of data provided pursuant to the Commission Line of
Business statistical reporting program.
These basic protections have their genesis in language contained in
three FTC Appropriations Acts, 88 Stat. 1822, 1840 (1974), 89 Stat.
611, 634 (1975) and 90 Stat. 937, 956 (1976), which applied only to the
Commission's line-of-business program. The addition of section 6(i)
eliminates the need to reenact annually what is meant to be a continuing protection.
The section has specific protections to prevent harm to companies
that supply the data. It prevents the release of information in a manner by which the particular establishment or individual furnishing
the line-of-business data can be identified as the data provided by each
responding company are often competitively sensitive. It provides
that no one other than sworn officers and employees of the Commission,
designated by it, may examine the actual reports filed by the companies supplying the data. Data which can be attributed to an individual submitter collected under the line-of-business program may not
be used for carrying out law enforcement purposes.
[page 13]
INVESTIGATIONS OF INSURANCE
h
Section 5.—Section 5 of the bill amends section 6 of the Federal
Trade Commission Act. Under the amendment, the FTC's investigative
and reporting powers are made explicity inapplicable to the business of
insurance (except to the extent authorized under subsections 6(c) and
6(d) relating to antitrust investigations).
For purposes of this amendment, the term "business of insurance'7
has the same meaning as used in the McCarran-Ferguson Act, 15 U.S.C.
§§ 1011-1015. The amendment would not, ty>wever, affect the FTC's
power to conduct investigations, .pursuant, to section 6(c) of the FTC
Act, to determine whether parties^are in compliance witn judicial decrees enjoining violations of the'antitrust laws. Finally, the amendment
does not affect the existing authority of the F.TC, under sections 5
and 18 of the FTC Act, to carry out law enforcement responsibilities
or to issue trade regulation rules to the extent consistent with the
McCarran-Ferguson Act.
Section 5 is made necessary because the FTC is misconstruing the
jurisdictional limitations clearly set forth in the McCarran-Ferguson
Act and is engaging in unauthorized activities which cannot effectively
be challenged or halted in the Federal courts.
The McCarran Act was passed in 1945 in reaction to United States v.
South-Eastern, Underwriters Ass'n., 322 U.S. 533 2( 1944), in which the
Supreme Court overruled earlier decisions holding that insurance
transactions were not interstate commerce. Insurance thus became subject to Federal statutes including the Federal antitrust laws enacted
under Congress' authority to regulate interstate commerce. The Supreme Court's decision created widespread apprehension that application of Federal laws would preempt or impair the extensive systems
developed by the States to regulate and tax insurance. Accordingly, in
section 1 of the McCarran-Ferguson Act, 15 U.S.C. § 1011, Congress
declared its policy "that the continued regulation and taxation by the
1114
FEDERAL TRADE COMMISSION
P.L. 96-252
several States of the business of insurance is in the public interest."
To implement this policy, section 2(b) of the McCarran Act, 15 U.S.C.
§ 1012(b), provides that the Sherman, Clayton and Federal Trade
Commission Acts are "applicable to the business of insurance" only "to
the extent that such business is not regulated by State law."
The Committee has undertaken a thorough legal analysis of the
statutory language and the underlying legislative history. Both make
it clear that the authors of the McCarran Act intended, where the
statutory prerequisites for exemption were satisfied, that the FTC
have no jurisdiction under any provision of the Federal Trade Commission Act. In particular, Congress in the McCarran Act made no
distinction between the provisions of the Federal Trade Commission
Act which govern the Commission's law enforcement function (principally section 5 of the FTC Act) and those which govern its separate
factfinding function (section 6 of the act). In either case, where an
activity comprises part of the "business of insurance" and is "regulated by State law," Congress divested the FTC of jurisdiction so as to
eliminate the possibility that the State's regulatory efforts would be
invalidated, impaired or superseded.
2 64 S.Ct. 1162, 88 L.Ed. 1440.
[page 14]
The Committee believes that additional legislative action, in the
form of a clarifying amendment, is now needed because of FTC actions
inconsistent with the jurisdictional limitations imposed by the McCarran Act. In testimony before Congress and in its various reports on
insurance, the Commission has erroneously interpreted the McCarran
Act to preclude only enforcement action under sections 5 and 18 of
the FTC Act, but not factfinding investigations or the issuance of public reports under section 6.
Acting under the incorrect assumption that it has jurisdiction, in
the last 18 months the FTC has devoted a considerable portion of its
resources to a broad program of insurance-related investigations, many
culminating in the release of higKlvpublicized reports. In these investigations, the Commission has^in effect assumed the social and
economic policymaking role which Congress has reserved exclusively
for the States. Two recent investigations illustrate this problem. FTC
consultants are presently studying the fairness of risk classification
and pricing in the area of private passenger automobile insurance, and
the FTC staff is engaged in an investigation of the extent to which
the Los Angeles insurance market is adequately served. Neither study
was undertaken at the request of Congress.
These FTC investigations are in areas clearly outside the Commission's jurisdiction. Both focus on ratemaking and related activities
which the Supreme Court has consistently held to be the "business of
insurance" within the meaning of the McCarran Act. See, e.g., SEC v.
National Securities, Inc., 393 U.S. 453, 460, 3 ( 1969); Group Life &
Health Insurance Co. \. Royal Drug Co., 99 S. Ct. 1067, 1078-1080
(1979). Of most serious concern, especially in light of the basic purpose of the McCarran Act, is that the Commission's investigations
concern matters which are subject to extensive State regulation. Indeed., several subjects being investigated by the FTC are under active
examination by State insurance departments and by the National Asso1115
LEGISLATIVE HISTORY
P.L. 96-252
a view toward legciaton of Insurance Commissioners (NAIC) with
Committee accordThe
d.
neede
where
es
chang
atory
regul
islative and
be avoided.
d
shoul
cation
dupli
ingly, is of the belief that such
ng section 6 of the
existi
of
end
the
to
so
provi
a
add
would
5
n
Sectio
from initiating
FTC
the
biting
prohi
46,
FTC Act, 15 U.S.C. section
g any reports,
issuin
or
nce
insura
of
ess
busin
the
of
on
tigati
any inves
The amendess.
busin
nce
insura
the
on
findings or recommendations
is required
as
s"
ation
regul
e
"Stat
of
nce
existe
the
re
requi
ment does not
from
FTC
the
des
preclu
it
under the McCarran-Ferguson Act. Thus
dior
scope
,
sophy
philo
the
izing
critic
or
merely studying, evaluating
does
t
dmen
amen
the
rection of State insurance regulation/However,
Act, as modified
not affect existing authority. Section 6 (d) of the FTC
ress or the
Cong
the
by 15 U.S.C. section 46a, which provides that d violations of the
allege
tigate
inves
to
President may direct the FTC
Congress. Further,
antitrust statutes and to report all facts to the itutio
nally founded
const
the
s
affect
the amendment in no way
ct investicondu
to
ittee
Comm
erce
Comm
the
of
rity
legislative autho
ning tesobtai
as
s
mean
such
by
cts,
gations on insurance-related subje
reguState
of
ance
assist
the
sting
reque
or
ls
officia
FTC
timony from
6(c)
n
sectio
t
intac
s
leave
t
dmen
latory officials. Similarly, the amen
ct
condu
to
r
powe
has
ission
Comm
the
which
under
Act,
of the FTC
s 89 S.Ct. 564, 21 L.Ed.2d 668.
i
[page 15]
in connection with the question whethts
repor
issue
and
ons
investigati
violations of
er parties are in compliance with final decrees restraining
laws.
the antitrust
:s existing jurisdicFinally, the amendment does not affect the FTC
ct law enforcecondu
to
Act,
arran
McC
the
by
d
scribe
tion, as circum
es section 5
violat
ct
condu
er
wheth
ment investigations to determine
authorized
eans
anvon
by
ions
violat
such
y
remed
to
and
of the FTC Act
jurisdichas
ission
Comm
the
which
in the FTC Act or other laws over
d, or
expan
limit,
to
ed
intend
not.
fore,
there
is,
t
dmen
tion. The amen
Act
on
ergus
rren-F
McCa
the
of
ty
in any way change the applicabili
than
r
(othe
Act
ission
'Comm
Trade
ral
Fede
the
of
to the provisions
t) or to the
section 6 which is specifically addressed by the amendmen
1
Acts.
ton
Clay
and
an
provisions of the Sherm
iction to conUnder the amendment, the FTC would have no jurisd
rs which
matte
of
ons
tigati
inves
ment
force
duct .self-initiated, nonen
the Mcof
ing
mean
the
n
constitute the "business of insurance" withi
in
aking
ratem
of
on
tigati
inves
the
ple,
exam
Carran-Ferguson Act, for
ratence
insura
obile
East Los Angeles and the MIT study of autom
ial decisions establish
making. The legislative history and the judicother
activities): ratethat the insurance business includes (among collection
and analysis
the
n,
ficatio
classi
making, underwriting, risk
the pooland
es,
polici
of loss experience, the selling and advertising of to terminate ongoing
ned
desig
thus
is
t
ing of risks. The amendmen
areas to the extent that
and unlawful FTC investigations into thesefor
law enforcement purcted
condu
such investigations are not being
and issue reports on
tigate
inves
to
free
n
remai
would
FTC
poses. The
See, e.g. SEC v.
nce."
insura
of
ness
"busi
activities not constituting the
v. National
SEC
Variable Annuity Life Ins. Co., 359 U.S. 65 4(1959);
Ins. Co. v.
th
Heal
&
Life
p
Grou
);
Securities, Inc., 393 U.S. 4536(1969
1116
FEDERAL TRADE COMMISSION
P.L. 96-252
Royal Drug Co., 99 S. Ct. 1067 (1979). However, while the FTC retains its authority to conduct law enforcement investigations of the
insurance business (to the extent presently permitted by the McCarran
Act]), such investigations may not be conducted for the purpose of obtaining information in circumstances where no possibility of law enforcement jurisdiction exists.
The amendment contemplates that, in determining what lies within
the "business of insurance," the FTI will adhere to the judicial precedents. However, the Committee also recognizes that reasonable differences of opinion may exist with regard to whether certain peripheral
activities of insurance companies or agents are the "business of insurance." The amendment is thus intended to permit judicial review
on jurisdictional questions as now permitted under the court decisions
construing the existing exemptions from section 6. See e.g., FTC v.
Miller, 549 F.2d 452 (7th Cir. 1977).
ENFORCEMENT AUTHORITY
Section 6.—Section 6 eliminates the threat of criminal sanctions applied to those recipients of a Commission subpena who in good faith
resist Commission subpenas by making such, sanctions inapplicable
1 Of course, nothing in this section is intended to affect the exsting powers of the
Commission to review the appropriateness of mergers under the Commission's
antitrust
authority. .
< 79 S.Ct. 618, 3 L.Ed.2d 640.
6 89 S.Ct. 564, 21 L.Ed.2d 668.
[page 16]
prior to a judicial order of enforcement. This is similar to the procedures applicable to the enforcement of the subpenas of several other
administrative agencies, and it accords the persons who are subjected
to a broad investigatory subpena a reasonable opportunity to obtain
judicial review of its legality.
/
ADVERTISING-^RULEMABJNG
Section 7.—The purpose of'section 7 (a) is to withdraw from the
Commission authority to promulgate rules governing commercial advertising that is not "false or deceptive." Under current law, the Commission may regulate acts or practices, including commercial advertising practices, mat are unfair or deceptive. While the Commission's
authority to challenge unfair commercial advertising has been exercised sparingly in the adjudicative context under section 5 of the FTC
Act, 15 U.S.C. § 45, the Committee is concerned that this grant of authority when applied on an industrywide basis in a section 118 rulemaking proceeding is too broad. This is evidenced by the Commission's
children's advertising rulemaking proceeding where, among other possible remedies the Commission is considering a ban on commercial advertising to young children, even though sucih advertising may not be
false or deceptive. The proposed amendment in subsection (a), in combination with subsection (b) requiring the text of any proposed rule
to be published in advance of the rulemaking proceeding will insure
that the children's advertising proceeding is terminated, and with respect to future rulemaking proceedings, the amendment will require
that the Commission concern itself only with advertising tihat may be
"false or deceptive." 2
1117
LEGISLATIVE HISTORY
P.L. 96-252
Agreed without objeciton to the Ford substitute to the Heflin amendment on subpenas. Senator Heflin withdrew his amendment extending
provisions of Section 12 to all subpenas.
FTC Jurisdiction to Initiate Investigations of Insurance.
Senator Cannon submitted an amendment to Section 6 of the Federal
Trade Commission Act to make clear that the FTC's general investigatory and report-making powers do not apply to the business of insurance.
On the following rollcall vote the above Cannon amendment was
approved 14 yeas and 1 voting present:
Teas
Present
Nays
Cannon
Ford
Long 1
Rollings
Inouye
Riegle 1
Exon
Heflin
Packwood
Goldwater*
Schmitt
Danforth
Kassebaum
Pressler
Warner
x By proxy.
Reconstruction of Orders.
Senator Warner offered an amendment to include a new section that
would require the FTC to reopen any final order if, after a reasonable
period of time, conditions in fact or law have changed and such request
shall be considered by the Commission within 120 days from the date
of filing.
^.
Without objection the Warner amendment was approved.
[page 35]
Sec. 21—Used Car Warranty Authority.
Senator Ford offered a technical amendment to add "or inspection"
after the words "mandatory warranty" and without objection it was
approved. Without objection Sec. 21 as amended was approved.
Without objection approved any necessary technical or conforming
amendments.
Chairman Cannon moved to report S. 1991 with an amendment in
the nature of a substitute.
On a rollcall vote of 15 yeas to 0 nays S. 1991 with an amendment in
the nature of a substitute was ordered favorably reported:
1136
LEGISLATIVE HISTORY
P.L. 96-252
dermines this procedure and prematurely and unwisely forecloses
public debate on a question fundamental to the health and well being
of the country's children.
Such precipitous action benefits neither the Senate, the advertising
community, the broadcasters, nor the public. For these reasons I oppose Section 7 of the bill. I intend to elaborate on my views on the floor
of the Senate.
While I voted favorably to report S. 1991, I did so primarily because it is necessary that an authorization bill for the FTC be enacted.
Indeed, apart from my opposition to Section 7,1 am troubled by other
changes made by the bill to the FTC's mandate to protect the public.
These changes are a step backward for consumers.
[page 59]
ADDITIONAL VIEWS OF MESSRS. SCHMITT,
GOLDWATER, AND PRESSLER
The Committee on Commerce, Science, and Transportation has held
comprehensive oversight hearings on the Federal Trade Commission
(FTC) over the last several months. These hearings have uncovered
a variety of problems at the Commission, both with regard to specific
proposed rulemakings and the procedures under which rules are
developed. In general, the Committee bill is responsive to the problems resulting from past abuses. Chairman Pertschuk admitted that
such abuses have occurred when he told the Committee that some FTC
staff members waged a "vendetta" against certain industries in the
development of rulemaking proposals in the past. We commend the
Committee for its actions to address some of the existing difficulties
at the FTC. But these are the problems of today; the Committee bill
does little, if anything, to prevent similiar abuses from occurring in
the future. For this reason we intend to offer a floor amendment to
provide for a legislative veto of proposed FTC rules. Acceptance of
this amendment will insure that in th§, future, controversies surrounding proposed FTC rules may be addressed by the Commerce Committee and the Senate in a timely, carrerully considered and systematic
procedure, rather than in an ad-hoc approach whenever there is an
authorization or appropriations bill pending.
THE NEED FOR LEGISLATIVE VETO
The broad legislative mandate given to the Federal Trade Commission by Congress makes the passage of legislative veto legislation
essential. The FTC Act merely provides that "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or
practices in or affecting commerce, are hereby declared unlawful."
Considering that rules of the Commission may apply to any act or
practice "affecting commerce," and that the only statutory restraint
is that it be unfair, the apparent power of the Commission with respect to commercial law is virtually as broad as the Congress itself.
In fact, the Federal Trade Commission may be the second most
powerful legislature in the country. The FTC claims the power to
declare any commercial act, practice or commission to be "unfair",
regardless of State law, and thereby to amend all State statutes and
reverse all State cases which may be inconsistent with its declaration.
1138
1
FEDERAL TRADE COMMISSION
P.L. 96-252
All 50 state legislatures and State supreme courts can agree that a
particular act is fair and lawful, but the five-man appointed FTC can
overrule them all.
Under the broad statutory language which governs the -Federal
Trade Commission, the FTC can regulate virtually every aspect of
America's commercial life. The FTC's rules are not merely narrow
interpretations of tightly drawn statutes; instead, they are broad
[page 601
policy pronouncements which Congress has an obligation to study
and review. Congress has delegated to an administrative agency the
authority to write rules and regulations having the effect of law. It
is only appropriate, consequently, that we hold back for Ourselves the
power to oversee and possioly disapprove those rules when the agency
strays too far afield.
CON8T1T U TlONAUTT
Several objections have been raised to providing Congress with the
use of this power. The most frequent is the claim that the legislative
veto is unconstitutional. It is clear, however, that if it were unconstitutional, we would surely know it by now; since 1932, Congress
has enacted over 295 provisions of law with legislative review or veto
powers. On those occasions where the veto has been challenged in
court, it has not been ruled unconstitutional.
On September 18th of this year, the Senate vetoed a rule of the
Federal Elections Commission dealing with candidate debates. There
was no discussion of the constitutionality of the legislative veto during the floor debate. The spector of Congress being overloaded with
FTC rules was not raised. On the contrary, both the Chairman and
ranking minority member of the Rules Committee felt the action was
appropriate, and in this case the legislative veto was used with efficiency and effectiveness. The transcript of the floor debate on this issue
/
follows at the end of these views.
It is an enigma why the legislatife^veto procedure should be thought
"appropriate" when used to revie\rxthe rules of the Federal Election
Commission, which regulates Members of Congress but highly objectionable when it might be used to review thje rules of the TTederal
Trade Commission which regulates our constituents.
If an election rule is objectionable to a single member of Congress
then a resolution of disapproval can be introduced and the concerns
of that Member given fair consideration. However, the rules of the
Federal Trade Commission are beyond the reach of the Congress and
thus beyond the reach of the public upon whom the rules may impose
tremendous costs, paperwork and inconvenience. The public must bear
the cost and wait a year or two, or more, before an amendment to an
authorization bill or a bill to terminate the rulemaking can be considered; if it is considered at all. This inconsistency is troubling; it suggests that we, as Members of Congress, believe we should live by different rules than the ordinary citizen. This double standard should be
rejected. We are convinced that the legislative veto procedure will be
as appropriate and efficient when it is directed toward the concerns of
the public about FTC rules, as it is when it is directed toward the
concerns of the Congress about FEC rules.
1139
LEGISLATIVE HISTORY
P.L. 96-252
This amendment includes a sunset provision that will require the
veto provision to lapse at the conclusion of the authorization period,
giving the Congress an opportunity to test this procedure over a limited period of time.
HOUSE ACTION
In the 95th Congress, the Hous% of Representatives passed an FTC
authorization bill which created a mechanism for possible Congressional review and disapproval of proposed FTC rules. The Senate did
[page 61]
not act on a similar provision and the Conferees twice returned a Conference Report to the House which did not contain a legislative veto.
On both occasions, it was rejected. The result was that there was no
FTC authorization bill in the 95th Congress.
In tiie current Congress, the House Committee on Interstate and
Foreign Commerce has included a legislative veto provision in the
FTC authorization bill which was passed on November 27, 1979 by
an overwhelming vote of 321 to 63. The House has made it clear that
an FTC bill which does not contain a legislative veto will be unacceptable. In light of the fact that the Federal Trade Commission has not
had an authorization bill since 1976, the Appropriations Committee
has been increasingly reluctant to appropriate funds for its continued
operations. In order to encourage passage of an authorization bill severe restrictions have been placed on the Commission in the continuing
Resolution for Appropriations. These restrictions prohibit the promulgation of any new rules and disallow final rules from going into
effect. In effect the FTC can do little more at present than pay the
salaries of its employees. Effective action in legitimate consumer protection initiatives has been hampered by the continuing uncertainty
surrounding the FTC authorization bill.
In order to put an end to this uncertainty, we strongly support the
passage of a floor amendment to provio^ for legislative review and possible veto of proposed FTC rules. This/is a moderate and reasonable
approach that will allow dispassionate consideration of the merits of
individual proposed rules rather than the legislative "free-for-all"
with a dozen or more important and wide ranging rules targeted simultaneously for termination by interest groups which has characterized efforts to pass an FTC authorization bill in the past In this
kind of atmosphere mistakes can occur and a solution to the problems
at the FTC is only deferred. Passage of a legislative veto amendment
will put an end to this unfortunate situation.
HABRISON SCHMTTT.
LARRY PRESSLER.
BARRY GOLDWATEB.
APPENDIX
RESOLUTION RELATING TO FUNDING AND SPONSORSHIP OF CANDIDATE
DEBATES
Mr. PELL. Mr. President, I wish to make a brief comment on the
resolution of disapproval of the debate regulations submitted by the
Federal Election Commission which I submitted. This resolution is
1140
V
FEDERAL TRADE COMMISSION
P.L. 96-252
QUARTERLY FINANCIAL REPORT PROGRAM
e House bill.
House bill.—The House bill contained no provision on the Quarterly Financial Report (QFR) Program.
Senate amendment.—The Senate amendment provided that by
October 31, 1981, the Federal Trade Commission (FTC) would
reduce the number of small businesses required to participate in
the Quarterly Financial Report Program by 25 per cent and that
the FTC would significantly simplify the reporting forms.
Conference substitute.—The conference substitute directs the
agency to determine ways in which the QFR Program can be administered with fewer reporting burdens on small businesses. The
agency is required under the Conference substitute to establish a
plan for reducing the reporting burdens after consulting with representatives of small businesses and with the agencies of the government who use the information contained in the QFR. The plan
is to address the ways in which the number of small businesses required to report can be reduced without impairing the utility of the
information collected and in which the reporting form can be simplified. The Conference substitute directs the agency to prepare the
plan and submit it to the Congress on or before December 31, 1980.
The changes in the QFR Program as set out in the plan are to go
into effect on October 31, 1981.
LINE OF BUSINESS
House bill.—The House bill contained no provision.
Senate amendment.—The Senate amendment provided specific
procedures to safeguard the confidentiality of data provided pursuant to the Commission Line of Business statistical reporting program.
Conference substitute.—The conference substitute adopts the
Senate provision.
/
INSURANCE
House bill.—The House bill contained no provision.
Senate amendment.—The Senate amendment amended section 6
of the Federal Trade Commission Act, making the FTC's investigative and reporting powers explicitly inapplicable to the business of
ublic certain
[page 29]
insurance (except to the extent authorized under sections 6(c) and
6(d) relating to antitrust investigations). The amendment also
allows the Commission to participate with HEW in a study of
Medigap insurance.
Conference substitute.—The conference substitute adopts the
Senate provision prohibiting the FTC from conducting investigations of the "business of insurance" under section 6 of the FTC Act
but with an amendment which provides that the Commission may,
upon a request by majority vote of either the Senate or House
Commerce Committee, conduct a study of the business of insurance
and report its findings to Congress. The amendment further provides that the authority to conduct such a study shall be limited to
the Congress during which a request is made. A study could be continued in a future Congress only if it was reauthorized.
1145
LEGISLATIVE HISTORY
P.L. 96-252
In adopting this amended provision from the Senate bill, the conferees wish to indicate their strong reaffirmation of the basic policy
of the McCarran-Ferguson Act: that the business of insurance is to
be regulated by the States. If the Commission believes that the
McCarran Act should be amended and a broader federal role established with respect to the regulation of insurance, the FTC should
exercise the authority it has to propose such legislation as it considers appropriate.
Finally, the conferees intend in authorizing the Commission to
conduct studies that this authority be limited to general review
and analysis of insurance policy issues not "investigations" of the
industry or segments of the industry.
ENFORCEMENT AUTHORITY
f!>
\\
House bill.—The House bill contained no provision.
Senate amendment—The Senate amendment would amend Section 10 of the FTC Act to provide that criminal sanctions for failure to comply with FTC subpoenas apply only after a United States
District Court orders compliance.
Conference substitute.—The conference substitute adopts the
Senate provision.
STANDARDS AND CERTIFICATION RULEMAKING
House bill.—The House bill contained no provision.
Senate amendment—The Senate amendment removed any authority of the Federal Trade Commission to promulgate a trade
regulation rule concerning the development and utilization of private standards and certification activities.
Conference substitute.—The conference substitute adopts the
Senate provision with an amendment specifically removing the
Commission's authority to issue a trade regulation rule with respect to "unfair or deceptive acts or practices" under section 18 of
the Federal Trade Commission Act. The substitute leaves unaffected whatever authority the Comm^selon might have under any other
provision of the FTC Act to issue rules with respect to "unfair
methods of competition" relating to standards and certification activities. However, the conferees believe the Commission should explore the possibility of issuing voluntary rules and guidelines in
this area. The conferees note that the Office of Management and
[page 30]
Budget has now issued OMB Circular No. A-119 which among
other things sets out procedures for the development of standards
applying to products purchased by the Federal Government. The
conferees hope the Commission will closely follow the activities of
other interested Federal agencies and, in the spirit of Executive
Order 12044, will avoid inconsistent or duplicative activity in this
area.
In the 1975 Magnuson-Moss Warranty-Federal Trade Commission
Improvement Act, the Congress specifically addressed the Commission's rulemaking authority over "unfair or deceptive acts or practices." With respect to "unfair methods of competition," section
18(a)(2) (15 U.S.C. 57a(2)) stated as follows:
1146