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SENATE FTC REAUTHORIZATION BILL BANS ADVERTISING "UNFAIRNESS" STANDARD

This article was originally published in The Tan Sheet

Executive Summary

SENATE FTC REAUTHORIZATION BILL BANS ADVERTISING "UNFAIRNESS" STANDARD for agency rulemaking on a permanent basis. The bill to reauthorize the Federal Trade Commission (S 1179) was introduced June 29 by Sen. Richard Bryan (D-Nev.) and is cosponsored by Sens. Slade Gorton (D-Wash.) and John Danforth (R-Mo.). The legislation would reauthorize FTC for fiscal years 1994 through 1996, but the ban on the commission's use of an unfairness standard in promulgating industry-wide rules pertaining to commercial advertising would remain in effect after authorization expired. Currently, use of such a standard to regulate advertising is temporarily banned. The House FTC reauthorization bill (HR 2243) contains no restrictions on use of the unfairness standard. Introduced by Rep. Al Swift (D-Wash.) and cosponsored by Rep. John Dingell (D-Mich.), the measure cleared the House June 21 ("The Tan Sheet" June 28, In Brief). FTC's authority to use the unfairness standard to regulate advertising has been a long-standing obstacle to reauthorization of the agency, with the House consistently favoring no restriction and the Senate in favor of restrictions. FTC has not been reauthorized since 1980. At a June 29 Senate Commerce, Science and Transportation/consumer subcommittee hearing on the Senate bill, FTC Chairperson Janet Steiger pointed out that a permanent ban on advertising rulemaking based on unfairness could call into question rules that have been promulgated in the past. "Depending on how broadly commercial advertising is defined, permanence could call into question some of the underpinnings" of standing rules, Steiger said. "This is not a problem when the ban is temporary or ongoing." In a statement submitted for the record, the Center for Science in the Public Interest opposed a permanent ban. "If Congress enacts legislation that prohibits the FTC from restricting industry-wide advertising on the basis of unfairness, it would be difficult for the commission to effectively remedy advertising practices that threaten the health and safety of consumers," the group argued. CSPI also pointed out that "limitations already imposed by the Supreme Court and the FTC ensure that the commission will not abuse its authority to restrict unfair advertising." CSPI also called for FTC and FDA to have consistent regulatory policies for food products under the Nutrition Labeling & Education Act. Steiger had indicated at a May hearing on the House FTC reauthorization bill that the commission is "reviewing the FDA and USDA regulations to determine the most appropriate manner of providing guidance to consumers and industry regarding harmonization of its food advertising enforcement" ("The Tan Sheet" May 31, p. 7). The Senate reauthorization bill also addresses the use of the unfairness standard in general. Sen. Bryan noted that S 1179 "requires the FTC to conduct industry-wide rulemakings only when there is evidence that such activities are prevalent, instead of initiating such actions when there is evidence of only one or two bad actors." Steiger characterized as "unnecessary" the provision limiting the commission's use of unfairness or deceptive acts and practices as standards in rulemaking. She said that FTC "supports the principle [the limitation] embodies," stating: "Rulemaking to impose remedies of industry-wide application is appropriate only where unfair or deceptive practices targeted by a proposed rule are prevalent." Steiger also noted that the Senate bill's definition of unfair acts or practices is unnecessary because it is taken from commission case law and FTC's unfairness policy statement. In response to a question about FTC's position on reauthorization legislation, Steiger maintained that the commission "continues to support a 'clean' bill reauthorizing the agency" without "restrictions in its overall authority." She emphasized, however, that "reauthorization has been one of my highest goals."
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