[Congressional Record Volume 140, Number 98 (Monday, July 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
CONFERENCE REPORT ON H.R. 2243, FEDERAL TRADE COMMISSION ACT AMENDMENTS 
                                OF 1994

  Mr. SWIFT. Mr. Speaker, I move to suspend the rules and agree to the 
conference report on the bill (H.R. 2243) to amend the Federal Trade 
Commission Act to extend the authorization of appropriations in such 
act, and for other purposes.
  The Clerk read the title of the bill.
  (For conference report and statement, see Proceedings of the House of 
July 21, 1994, at page H6006).
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Washington [Mr. Swift] will be recognized for 20 minutes, and the 
gentleman from California [Mr. Moorhead] will be recognized for 20 
minutes.
  The Chair recognizes the gentleman from Washington [Mr. Swift].


                             general leave

  Mr. SWIFT. Mr. Speaker, I ask unanimous consent that all Members have 
5 legislative days to revise and extend their remarks on the conference 
report to the bill, H.R. 2243.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Washington?
  There was no objection.
  Mr. SWIFT. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. SWIFT asked and was given permission to revise and extend his 
remarks.)
  Mr. SWIFT. Mr. Speaker, I am pleased to bring to the House this 
conference report to reauthorize the Federal Trade Commission. The FTC 
was last authorized in 1980. Because of differences with the other 
body, attempts to date to reauthorize the FTC have not succeeded. This 
legislative impasse was an unfair burden not only on the Commission, 
but on consumers and those industries that are regulated by the FTC. I 
am pleased to state that those differences have been constructively and 
satisfactorily resolved in this conference report.
  The report proposes modest increases in authorization levels, not to 
exceed $102 million in fiscal year 1996.
  The report includes a clarification of the Commission's subpoena 
authority to allow the procurement of physical evidence, and expanded 
venue authority and limited intervention authority. These procedural 
reforms have been requested by the FTC and have been reflected in 
previous House and Senate authorization bills.
  The bill also includes a provision restricting FTC authority over 
agricultural cooperatives. Under the Capper-Volstead Act, Congress has 
seen the Department of Agriculture to be the lead agency regarding the 
oversight of agricultural cooperatives. This provision reflects that 
understanding, and again, identical language has been included in 
previous reauthorization bills in both Houses.
  Finally, the report includes a definition of unfair acts or practices 
that closely parallels the 1980 policy statement of the Commission on 
the scope of the FTC's consumer unfairness jurisdiction. What the 
report does not include is a prohibition on rulemakings based upon the 
FTC's unfairness authority. The resolution of this issue, which 
required constructive compromise from all sides, has allowed us to 
bring to the floor the first authorization of the Federal Trade 
Commission in 14 years.
  I want to particularly commend the chairman of the Energy and 
Commerce Committee, Mr. Dingell, for his tireless efforts to present to 
the FTC a reauthorization of its important mandate. Subcommittee 
chairmen have come and gone as attempts to reauthorize were tried and 
failed, but Chairman Dingell has shown his usual leadership in taking 
on tough, controversial issues and seeing them through to a 
constructive resolution.
  I also want to recognize the diligent and constructive work of Mr. 
Moorehead and Mr. Oxley, and for their willingness to continue the 
process of constructive engagement in the face of many impediments. And 
finally, I want to commend Chairman Steiger for providing progressive 
and bipartisan leadership at the FTC.
  In restoring the image of the FTC as a problem-solving, pragmatic and 
hard-working agency, she provided a needed incentive to work through 
outstanding problems and ratify through this authorization, the 
Commission's mandate for protecting consumers from both deceptive and 
unfair acts.

                              {time}  1220

  Mr. Speaker, I reserve the balance of my time.
  Mr. MOORHEAD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of the conference report on 
this legislation. Through the efforts of our committee leadership, 
including Chairman Dingell, Subcommittee Chairman Swift, and 
Subcommittee Ranking Member Oxley, and almost a year of serious 
negotiation with the other body, we have finally produced the first 
House-Senate agreement on reauthorizing the Federal Trade Commission 
since 1980.
  It was that long ago, Mr. Speaker, that both bodies were able to see 
eye-to-eye on key issues, such as the FTC's authority over advertising 
practices. As a result of the lack of agreement, there has been a 12-
year lapse since the last authorization expired. During that interim 
period, various stopgap measures to keep the FTC on the right track 
have been enacted on the annual appropriations bills.
  Now that we have substantive agreement on permanent amendments to the 
FTC Act itself, these temporary measures are no longer necessary. The 
conference report includes provisions on all the key areas--including 
retaining existing restraints on the FTC's authority over agricultural 
marketing orders. Most importantly, this legislation includes the 
first-ever permanent statutory guidance for the FTC on how to apply the 
agency's authority over so-called unfair acts or practices.
  In 1980, Congress tried to address the problem of an overly vague and 
elastic unfairness standard by simply prohibiting rulemakings aimed at 
advertising practices under this standard. There were, however, no 
substantive guideposts for the agency, and the FTC was free to proceed 
as it wished in individual cases. Certain criteria were adopted by the 
FTC as a matter of administrative practice, but these were not 
permanent, and could be altered as views or the membership of the FTC 
changed.
  The legislation we are considering today changes all that: The FTC 
will now have permanent criteria in the statute governing all 
proceedings aimed at unfair acts or practices. These are derived from 
policy pronouncements by the FTC in this area, but they will now have 
the force of statute. Specifically, an act or practice can only be 
found to be unfair if the FTC finds first, that the act or practice 
causes substantial injury to consumers; second, that the injury is not 
reasonably avoidable; and third, that any injury is not outweighed by 
countervailing benefits to consumers or to competition. In addition, 
the FTC will be allowed to proceed with a rulemaking using the 
unfairness standard only if the agency has reason to believe that the 
act or practice is prevalent. Moreover, prevalence will now be a 
statutorily defined term, with specific criteria for the FTC to meet.
  Taken as a whole, these new criteria defining the unfairness standard 
should provide a strong bulwark against potential abuses of the 
unfairness standard by an overzealous FTC--a phenomenon we last 
observed in the late 1970's. Setting up clear guideposts for the FTC in 
its policy toward advertising is also fully consistent with the 
approach taken by the Supreme Court in the last few years. The Court 
has clearly begun to emphasize the first amendment protections that 
attach to commercial speech. While these protections are clearly less 
stringent than those governing traditional political expression, they 
both inform and limit the degree to which Congress may restrain 
commercial speech. I am very pleased that the FTC authorization 
contained in this conference report is fully consonant with the Court's 
recent decisions in this field.
  The major improvements to the FTC Act made in this legislation would 
not have been possible without much hard work and diligent cooperation 
between the House Energy and Commerce Committee and the Senate Commerce 
Committee. I commend the leadership and members of both committees. In 
addition, we benefited from the helpful advice and input of the FTC 
itself, from other State and Federal agencies, from consumer groups, 
and from the affected industries--particularly the advertising industry 
and the food and beverage industries.
  This legislation represents a real breakthrough that resulted from 
true bipartisan cooperation. It is vitally important that an agency 
with important consumer protection responsibilities like the FTC be 
given a current charter by the Congress. We also need to remember that 
in addition to its consumer protection functions, the FTC also has 
important antitrust responsibilities, and administers other laws 
dealing with consumer credit. Against this background, I am 
exceptionally pleased to support the approval of this conference 
report.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. SWIFT. Mr. Speaker, I yield myself 1 minute simply to make the 
observation that the Congress is often at its best when no one is 
watching. In fact, there is no reason one would want to watch us when 
we are at our best, because it usually means things are moving very 
smoothly.
  This bill and the one just passed came out of the Committee on Energy 
and Commerce not because there are no differences between the two 
parties on the committee, but because the Members seek in good faith to 
work those out. In my judgment, we get better public policy that way in 
any event, and I think it just needs to be noted on the record that 
this bill is not one without controversy. It is merely one in which we 
have worked out carefully and with due regard to the respective 
philosophical views presented on the committee this bill so that we 
have a good, balanced piece of public legislation.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Michigan [Mr. Dingell] chairman of the full committee.
  (Mr. DINGELL asked and was given permission to revise and extend his 
remarks.)
  Mr. DINGELL. Mr. Speaker, I rise to commend the distinguished 
gentleman from Washington State for the outstanding leadership he has 
demonstrated in this matter. He has had an extraordinarily good year.
  It is with some regret that I find that that year will end and he 
will be leaving us. Let me take this opportunity to acknowledge that he 
has done a fine job with regard to Superfund, with regard to this 
matter, and also he is now working with diligence on the interstate 
transportation of solid waste and a number of other matters of 
importance. The House, indeed, has a duty to respect and admire and 
congratulate the gentleman for the fine work which he has done.
  Mr. Speaker, I am pleased to rise in strong support of the conference 
report.
  The Federal Trade Commission is one of our oldest and most important 
independent agencies. Its basic statutory mission, under the FTC Act, 
is to guard against unfair methods of competition and unfair or 
deceptive acts or practices in or affecting commerce. The Commission 
has additional responsibilities under approximately 30 other statutes, 
as well as under dozens of trade regulation and practice rules 
governing specific industries and practices. The duties of this 
important agency cover a broad range of consumer protection, antitrust, 
and other areas of vital concern to the public interest.
  It is unfortunate that the FTC has operated without authorization 
legislation since 1982. At the heart of this stalemate has been a 
disagreement over the scope of the FTC's authority of unfair 
advertising practices. Today's action by the House breaks the stalemate 
and paves the way for the orderly and proper authorization of the FTC.
  The conference report represents a compromise between competing 
views. I and many others believe that the Commission's unfairness 
authority as it applies to advertising is appropriate, necessary, and 
constitutional. Reasons supporting this position were set forth in the 
committee report we filed when the House passed its bill early last 
year, along with an historical and substantive presentation of the 
legal and policy considerations surrounding this issue. Others believe 
the FTC's authority in this area should be severely restricted or 
eliminated. The compromise agreed upon: First, preserves the FTC's 
authority to prohibit unfair advertising acts or practices, premised 
upon criteria developed and applied by the FTC since 1980, including 
consideration of public policies; and second, removes the 
appropriations ban on unfairness rulemakings. While this is not my 
preferred position, the compromise will not undercut the FTC's 
authority to take appropriate action in any significant fashion against 
unfair advertising.

  Some State attorneys general argue that the action taken today will 
restrict their ability to address unfair advertising practices. While I 
certainly want to commend and express my appreciation to our friends 
who have vigorously and faithfully joined us in defending the FTC's 
unfairness authority, I must respectfully disagree with the notion that 
the compromise represents a significant departure from the manner in 
which the FTC--and States that base their laws on the FTC Act--may 
address unfair advertising problems. The compromise is premised on the 
1980 policy statement of the FTC on unfairness, as applied and 
interpreted by the Commission since 1980. The compromise clearly allows 
the FTC to consider public policies in making a determination of 
unfairness. To the extent that State law is tied to the FTC Act or 
interpretations thereof, the State legislature is free to change such 
law. In short, the compromise does not really affect the manner in 
which unfairness cases have been decided since 1980. Additionally, the 
bill removes the ban that has existed since 1982 in appropriations 
bills on FTC unfair advertising rulemakings.
  In this latter regard, it is unfortunate but true that normal and 
appropriate Congressional procedures have been bypassed and abused for 
many years by those who favor restricting the FTC's authority over 
unfair advertising practices. Putting legislative restrictions on the 
FTC's unfairness authority in appropriations bills has become an all 
too familiar annual practice, particularly in the other body. However 
one views the merits of the unfairness issue, we can all agree that 
legislating by appropriations bills is a dangerous and 
counterproductive practice. It fosters uncertainty about, if not 
disrespect for, the law. It impedes the appropriate and timely 
consideration of substantive issues. It takes agency policy review from 
the committee with subject matter expertise and places it in the hands 
of a committee that is concerned primarily with funding considerations. 
As well, the lack of an authorization bill takes its toll on the agency 
involved. Periodic authorizing legislation can help to give direction 
to an agency, to enhance institutional morale, to protect the agency 
from the uncertainty surrounding annual appropriations bills, and to 
encourage respect for the agency and the laws under which it operates.

  I commend the distinguished chairman of our Subcommittee on 
Transportation and Hazardous Materials, Mr. Swift, for his leadership 
in this matter. As well, I deeply appreciate the cooperation and 
guidance we have received from Mr. Moorhead and Mr. Oxley, the ranking 
Republicans on our committee and subcommittee. I also commend the 
conferees from the other body, Chairman Hollings, Mr. Bryan, Mr. Ford, 
Mr. Danforth, and Mr. Gorton, for their work in completing this matter.
  Finally, I wish to express my particular appreciation to the 
gentleman from New York [Mr. Manton] for his leadership on this 
legislation. As a conferee, Mr. Manton played the critical role in 
achieving a final resolution of the unfairness issue. Mr. Manton and 
his administrative assistant, Mr. Steve Vest, provided wise and honest 
counsel to me and other members of the conference and helped to bride 
the gap in communicating with interested parties concerning these 
issues. Mr. Manton's key role in resolving an issue that has vexed many 
Congresses proves again to me his great value to our committee, to the 
Congress, and to his constituents.
  I urge all Members to support this measure today.

                              {time}  1230

  Mr. SWIFT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from New York [Mr. Manton], to whom the chairman of the full 
committee, the gentleman from Michigan [Mr. Dingell] referred, and who 
was so able and so important in the passage of this legislation.
  Mr. MANTON. Mr. Speaker, I thank the gentleman for yielding this time 
to me.
  Mr. Speaker, I rise in strong support of the conference report on the 
Federal Trade Commission Act Amendments of 1994. In passing this 
conference report today, the House will pave the way for the enactment 
of an FTC authorization bill, an event that has not occurred in 14 
years.
  I want to take this opportunity to commend Chairman Dingell, Chairman 
Swift, Mr. Moorhead, and Mr. Oxley, and their excellent staffs, for 
working to resolve all of the issues before the conference.
  Mr. Speaker, the Federal Trade Commission plays an invaluable role in 
promoting the efficient functioning of our free market economy. The 
Commission protects business and industry from unfair methods of 
competition, and it protects consumers from unfair or deceptive 
advertising and marketing practices. This conference report strengthens 
and clarifies the Commission's administrative and enforcement policies 
and authorizes sufficient funding to ensure the Commission has the 
tools it needs to fulfill its mission.
  Mr. Speaker, much of the debate on this legislation has focused on 
the FTC's section 18 authority to issue industry-wide rulemaking 
relating to unfair advertising practices. The Commission has been 
banned from such rulemaking since 1980. The ban resulted from a number 
of controversial industry-wide rulemaking proceedings initiated by the 
Commission during the late 1970's. Industry argued the section 18 
authority was vague and overly broad.
  The conference report ends the unfairness rulemaking ban, but 
includes a precise and narrowly defined definition of unfairness.
  The conference agreement establishes a three-pronged test to limit 
unfair acts that cause or are likely to cause substantial injury to 
consumers, which is not reasonably avoidable by consumers themselves, 
and is not outweighed by countervailing benefits to consumers or 
competition.
  The definition is derived from the 1980 policy statement of the 
Commission and a 1982 letter from the Commission regarding unfairness.
  The agreement also allows the Commission to consider public policies 
as evidence in determining whether an act is unfair.
  There was come concern that allowing the use of public policy 
considerations was too vague and broad in scope. However, the use of 
public policy as evidence in determining unfairness is fully consistent 
with current FTC practices. Furthermore, the conference report 
carefully limits the use of public considerations. The conference 
agreement clearly states that such public policy considerations may not 
serve as an independent basis for a finding of unfairness.
  Mr. Speaker, the willingness of all those concerned with this 
critical issue to develop a compromise made it possible for this 
conference report to move forward.
  Mr. Speaker, again I want to praise my colleagues on the conference 
committee and the fine work of their staffs, particularly David 
Tittsworth of the majority staff and Glen Scammell on the minority 
side.
  I urge my colleagues to vote in favor of the conference report.
  Mr. OXLEY. Mr. Speaker, I strongly support the approval of this 
conference report. This House-Senate agreement on reauthorization of 
the Federal Trade Commission represents a breakthrough that can end a 
12-year lapse in the agency's authorization. Since the last 
authorization expired in 1982, there have been several reauthorization 
bills, and some conferences, but never a successful agreement between 
the two bodies.
  1994 is different. This time, through the diligence of our own 
committee leadership, including Mr. Dingell, Mr. Moorhead, and Mr. 
Swift, as well as the Senate Commerce Committee, we have finally been 
able to reach a consensus. The conference version of H.R. 2243 
reauthorizes the FTC, an agency with very important consumer protection 
and antitrust responsibilities. The bill also makes a number of 
technical improvements to the FTC Act as requested by the FTC on 
matters relating to enforcement of Commission orders.
  The bill also carries forward and makes permanent various limitations 
on FTC authority that have had to be handled on a temporary basis 
through annual appropriations riders during the 12-year hiatus in 
authorizations. These include limits on the FTC's authority over 
agricultural marketing orders. The most important of these concerns the 
FTC's authority over unfair acts or practices, and that requires a 
little background.
  During the Carter administration, the FTC went amok. By endeavoring 
to categorize huge expanses of American advertising as unfair, the 
agency produced a bipartisan backlash that culminated in the passage of 
the 1980 authorization. At that time, Congress prohibited rulemakings 
aimed at advertising, if the rulemakings were premised on the very 
elastic and vague unfairness standard. However, Congress did not 
attempt to clarify or define the standard itself, which remained open 
to varying interpretations.
  In this bill, we are filling that gap. While the FTC will be 
permitted to conduct rulemakings based on the unfairness standard, it 
may do so only if specific tests concerning the prevalence of the 
allegedly unfair acts or practices are met first.
  In all cases--whether individual adjudications or rulemakings--the 
FTC will have to comply with specific statutory guidelines regarding 
what constitutes an unfair act or practice. These guidelines are 
derived from various administrative pronouncements of the FTC, but for 
the first time, they will become part of the statute. This will lend 
permanence and predictability to a legal standard that in the past, has 
been subject to changing views and interpretations at the FTC.
  When instituting any kind of unfairness-based proceeding, the FTC 
will be required to establish that the act or practice produces 
substantial consumer injury, that consumers cannot reasonably avoid the 
injury, and that the injury is not outweighed by other benefits to 
consumers or to competition. Thus, the agency will have clearer 
guidance from Congress in this field, and the private sector will have 
a better-defined standard that is far less prone to abuse than in the 
past.
  The House-Senate agreement on these new standards could not have come 
about without a lot of hard work by both committees, by the FTC, other 
Federal and State agencies, and by industry. I want particularly to 
acknowledge the assistance of the advertising industry and the many 
companies that manufacture food products and beverages. This was truly 
a team effort, and the American consumer as well as American business 
will be better served in the future as a result of this legislation.
  In fashioning the new standards for determining whether acts or 
practices are unfair, we were working against the background of recent 
Supreme Court decisions which illustrate a heightened awareness of the 
first amendment protections that apply to commercial speech, including 
advertising. Although it does not rise to the level of classic first 
amendment political expression, commercial speech performs an important 
role in our society, by informing and educating consumers about the 
choices available to them. We have been careful in this legislation to 
avoid unduly restraining the proper uses of truthful commercial speech, 
a vital element in our successful capitalist economy.
  Finally, Mr. Speaker, I want to thank all of my colleagues on the 
committee who helped move this bill forward, when the outcome was very 
much in doubt. By their actions, they made a very strong statement on 
the willingness of this authorizing committee to discharge its 
responsibilities--even those that prove quite difficult.
  Mr. SWIFT. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Fields of Louisiana). The question is on 
the motion offered by the gentleman from Washington [Mr. Swift] that 
the House suspend the rules and agree to the conference report on the 
bill, H.R. 2243.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the conference report was agreed 
to.
  A motion to reconsider was laid on the table.

                          ____________________