[Congressional Record Volume 154, Number 55 (Tuesday, April 8, 2008)]
[Senate]
[Pages S2745-S2756]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DORGAN (for himself and Mr. Inouye):
  S. 2831. A bill to reauthorize the Federal Trade Commission, and for 
other purposes; to the Committee on Commerce, Science, and 
Transportation.
  Mr. DORGAN. Mr. President, today I am introducing the Federal Trade 
Commission Reauthorization Act of 2008. I am joined by Senator Inouye. 
We seek with this reauthorization to give the Federal Trade Commission, 
FTC, what it needs to protect consumers from unfair or deceptive 
practices and unfair methods of competition.
  The agency has a very important mission, but needs more resources and 
authority. The number of FTC employees has been greatly reduced from 
its pre-1980 high of 1,746, and the agency currently has approximately 
1,102 employees. We need to make sure that they have the manpower and 
the technology to protect consumers.
  I'd like to take a second to highlight one of the areas where the FTC 
needs authority most. The subprime loan market was an orgy of greed 
from a large number of lenders who knowingly put borrowers in mortgage 
loans that they could not afford--while at the same time loading up 
these loans with provisions that trigger large fees and penalties.
  The mortgage brokers ran ads from coast to coast--you have seen them: 
``Do you have bad credit? Do you have trouble getting a loan? Have you 
been missing payments on your home loan? Have you filed for bankruptcy? 
It doesn't matter. Come to us; we will give you a loan.''
  Many borrowers were brought in by teaser rates, interest-only 
payments, no payments for 12 months, etc. Loans had quick resets to 
higher and unaffordable interest rates. Loans had prepayment penalties. 
Marketed loan payment amounts did not include escrowed amounts, taxes, 
insurance, and other financial obligations. These unfair and deceitful 
advertisements are still on Web sites for lenders across the country 
today. The FTC needs the authority to stop this practice and resources 
to investigate and go after the bad actors.
  Let me tell you a bit about what the bill does. The bill provides for 
a 7-year reauthorization starting in 2009. We set the fiscal year 2009 
funding at $264 million and increase it by 10 percent per year. In 
addition, we give them an additional $20 million to be used by the 
commission to improve technology in support of its competition and 
consumer protection missions.
  We give the FTC independent litigating authority so they won't have 
to refer their cases to the Department of Justice. We also give the FTC 
the authority to give preference in the hiring process to 
administrative law judges who have experience in their issues.
  We provide the FTC the authority to commence a civil action to 
recover civil penalties in a district court for any violation of the 
FTC Act.
  We extend their jurisdiction to allow them to go after nonprofit 
entities as well, so bad actors cannot hide behind nonprofit status, 
and we allow them to go after those aiding and abetting an FTC 
violation.
  We also give them the authority, by majority vote of the full 
commission, to waive their current rulemaking requirements for any rule 
involving a consumer protection matter.
  We require the FTC to conduct a rulemaking under the Administrative 
Procedures Act, APA, which is faster than their current Magnuson-Moss 
authority, in the area of subprime loans. The commission has sent 200 
warning letters to mortgage advertisers and is conducting several 
investigations of mortgage advertisers and subprime lenders. In 
addition, the FTC has brought 21 cases in the last decade. But they 
haven't had the opportunity to review the bad practices and create a 
rule preventing their reoccurrence. We give them authority to create a 
rule preventing unfair or deceptive behavior by lenders and allow the 
State attorneys general to enforce the rule.
  Finally, we repeal the common carrier exemption as the FTC has long 
been requesting. There are too many problems in the telecommunications 
world that need to be addressed by the FTC--consumers should not be 
left unprotected. We also make sure that the State Do Not Call laws are 
not preempted by Federal regulations.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2831

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Federal 
     Trade Commission Reauthorization Act of 2008''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of comments.
Sec. 2. Authorization of appropriations.
Sec. 3. Independent litigation authority.
Sec. 4. Specialized administrative law judges.
Sec. 5. Civil penalties for violations of the Federal Trade Commission 
              Act.
Sec. 6. Application of Federal Trade Commission Act to tax-exempt 
              organizations.
Sec. 7. Aiding and abetting a violation.
Sec. 8. Permissive administrative procedure for consumer protection 
              rules.
Sec. 9. Rulemaking procedure for subprime lending mortgages and 
              nontraditional mortgage loans.
Sec. 10. Harmonizing FTC rules with banking agency rulemaking.
Sec. 11. Enforcement by State attorneys general.
Sec. 12. Harmonization of national do-not-call registry and effect on 
              State laws.
Sec. 13. FTC study of alcoholic beverage marketing practices.
Sec. 14. Common carrier exception.

     SEC. 2. AUTHORIZATION OF APPROPRIATIONS.

       The text of section 25 of the Federal Trade Commission Act 
     (15 U.S.C. 57c) is amended to read as follows:
       ``(a) In General.--There are authorized to be appropriated 
     to carry out the functions, powers, and duties of the 
     Commission--
       ``(1) $264,000,000 for fiscal year 2009;
       ``(2) $290,400,000 for fiscal year 2010;
       ``(3) $319,400,000 for fiscal year 2011;
       ``(4) $351,400,000 for fiscal year 2012;
       ``(5) $386,500,000 for fiscal year 2013;
       ``(6) $425,200,000 for fiscal year 2014; and
       ``(7) $467,700,000 for fiscal year 2015.
       ``(b) Litigation and Internet Commerce Technology.--There 
     are authorized to be appropriated to the Commission 
     $20,000,000 for each of fiscal years 2009 through 2015 to be

[[Page S2755]]

     used by the Commission to improve technology in support of 
     the Commission's competition and consumer protection 
     missions.
       ``(c) International Technical Assistance.--From amounts 
     appropriated pursuant to subsection (a), the Commission may 
     spend up to $10,000,000 for each of fiscal years 2009 through 
     2015 to continue and enhance its provision of international 
     technical assistance with respect to foreign consumer 
     protection and competition regimes.''.

     SEC. 3. INDEPENDENT LITIGATION AUTHORITY.

       Section 16(a) of the Federal Trade Commission Act (15 
     U.S.C. 56(a)) is amended--
       (1) by striking paragraph (1) and inserting ``(1) The 
     Commission may commence, defend, or intervene in, and 
     supervise the litigation of any civil action involving this 
     Act (including an action to collect a civil penalty) and any 
     appeal of such action in its own name by any of its attorneys 
     designated by it for such purpose. The Commission shall 
     notify the Attorney General of any such action and may 
     consult with the Attorney General with respect to any such 
     action or request the Attorney General on behalf of the 
     Commission to commence, defend, or intervene in any such 
     action.'';
       (2) by striking subparagraph (A) of paragraph (3) and 
     inserting ``(A) The Commission may represent itself through 
     any of its attorneys designated by it for such purpose before 
     the Supreme Court in any civil action in which the Commission 
     represented itself pursuant to paragraph (1) or (2) or may 
     request the Attorney General to represent the Commission 
     before the Supreme Court in any such action.''; and
       (3) by striking paragraph (4) and redesignating paragraph 
     (5) as paragraph (4).

     SEC. 4. SPECIALIZED ADMINISTRATIVE LAW JUDGES.

       (a) In General.--In appointing administrative law judges 
     under section 3105 of title 5, United States Code, to conduct 
     hearings and render initial decisions in formal adjudicative 
     matters before it, the Federal Trade Commission may give 
     preference to administrative law judges who have experience 
     with antitrust or trade regulation litigation and who are 
     familiar with the kinds of economic analysis associated with 
     such litigation.
       (b) Details.--If the Commission asks the Office of 
     Personnel Management to assign an administrative law judge 
     under section 3344 of title 5, United States Code, to conduct 
     a hearing or render an initial decision in a formal 
     adjudicative matter before it, the Commission may request the 
     assignment of an administrative law judge who has experience 
     with antitrust or trade regulation litigation and is familiar 
     with the kinds of economic analysis associated with such 
     litigation and the Office of Personnel Management shall 
     comply with the request to the maximum extent feasible.

     SEC. 5. CIVIL PENALTIES FOR VIOLATIONS OF THE FEDERAL TRADE 
                   COMMISSION ACT.

       Section 5(m)(1)(A) of the Federal Trade Commission Act (15 
     U.S.C. 45(m)(1)(A)) is amended--
       (1) by inserting ``this Act, or'' after ``violates'' the 
     first place it appears; and
       (2) by inserting ``a violation of this Act or such act is'' 
     after ``such act is''.

     SEC. 6. APPLICATION OF FEDERAL TRADE COMMISSION ACT TO TAX-
                   EXEMPT ORGANIZATIONS.

       Section 4 of the Federal Trade Commission Act (15 U.S.C. 
     44) is amended by striking ``members.'' in the second full 
     paragraph and inserting ``members, and includes an 
     organization described in section 501(c)(3) of the Internal 
     Revenue Code of 1986 that is exempt from taxation under 
     section 501(a) of such Code.''.

     SEC. 7. AIDING AND ABETTING A VIOLATION.

       Section 10 of the Federal Trade Commission Act (15 U.S.C. 
     50) is amended by adding at the end thereof the following:
       ``It is unlawful for any person to aid or abet another in 
     violating any provision of this Act or any other Act 
     enforceable by the Commission.''.

     SEC. 8. PERMISSIVE ADMINISTRATIVE PROCEDURE FOR CONSUMER 
                   PROTECTION RULES.

       (a) In General.--Section 18 of the Federal Trade Commission 
     Act (15 U.S.C. 57a) is amended by adding at the end thereof 
     the following:
       ``(k) Alternative Rulemaking Procedure.--The Commission 
     may, by majority vote of the full Commission, dispense with 
     the requirements of other provisions of this section and of 
     section 22 of this Act with respect to rulemaking involving a 
     consumer protection matter (as determined by the Commission). 
     If the Commission dispenses with such requirements with 
     respect to such a rulemaking, it shall conduct such 
     rulemaking in accordance with section 553 of title 5, United 
     States Code, and in such case the provisions for judicial 
     review of rules promulgated under section 553 of title 5 
     shall apply.''.

     SEC. 9. RULEMAKING PROCEDURE FOR SUBPRIME LENDING MORTGAGES 
                   AND NONTRADITIONAL MORTGAGE LOANS.

       Section 18 of the Federal Trade Commission Act (15 U.S.C. 
     57a), as amended by section 8, is further amended by adding 
     at the end thereof the following:
       ``(l) Special Rule for Certain Mortgage-related 
     Rulemakings.--Notwithstanding any other provision of this 
     section, section 22 of this Act, or any other provision of 
     law, the Commission shall conduct rulemaking proceedings with 
     respect to subprime mortgage lending and nontraditional 
     mortgage loans in accordance with section 553 of title 5, 
     United States Code, and the provisions for judicial review of 
     rules promulgated under section 553 of title 5 shall 
     apply.''.

     SEC. 10. HARMONIZING FTC RULES WITH BANKING AGENCY 
                   RULEMAKING.

       (a) In General.--The second sentence of section 18(f)(1) of 
     the Federal Trade Commission Act (15 U.S.C. 57a(f)(1)) is 
     amended--
       (1) by striking ``The Board of Governors of the Federal 
     Reserve System (with respect to banks) and the Federal Home 
     Loan Bank Board (with respect to savings and loan 
     institutions described in paragraph (3))'' and inserting 
     ``Each Federal banking agency (with respect to the depository 
     institutions each such agency supervises)''; and
       (2) by inserting ``in consultation with the Commission'' 
     after ``shall prescribe regulations''.
       (b) FTC Concurrent Rulemaking.--Section 18(f)(1) of such 
     Act is further amended by inserting after the second sentence 
     the following: ``Such regulations shall be prescribed jointly 
     by such agencies to the extent practicable. Notwithstanding 
     any other provision of this section, whenever such agencies 
     commence such a rulemaking proceeding, the Commission, with 
     respect to the entities within its jurisdiction under this 
     Act, may commence a rulemaking proceeding and prescribe 
     regulations in accordance with section 553 of title 5, United 
     States Code. If the Commission commences such a rulemaking 
     proceeding, the Commission, the Federal banking agencies, and 
     the National Credit Union Administration Board shall consult 
     and coordinate with each other so that the regulations 
     prescribed by each such agency are consistent with and 
     comparable to the regulations prescribed by each other such 
     agency to the extent practicable.''.
       (c) GAO Study and Report.--Not later than 18 months after 
     the date of enactment of this Act, the Comptroller General 
     shall transmit to Congress a report on the status of 
     regulations of the Federal banking agencies and the National 
     Credit Union Administration regarding unfair and deceptive 
     acts or practices by the depository institutions.
       (d) Technical and Conforming Amendments.--Section 18(f) of 
     the Federal Trade Commission Act (15 U.S.C. 57a(f)) is 
     amended--
       (1) in the first sentence of paragraph (1)--
       (A) by striking ``banks or savings and loan institutions 
     described in paragraph (3), each agency specified in 
     paragraph (2) or (3) of this subsection shall establish'' and 
     inserting ``depository institutions and Federal credit 
     unions, the Federal banking agencies and the National Credit 
     Union Administration Board shall each establish''; and
       (B) by striking ``banks or savings and loan institutions 
     described in paragraph (3), subject to its jurisdiction'' 
     before the period and inserting ``depository institutions or 
     Federal credit unions subject to the jurisdiction of such 
     agency or Board'';
       (2) in the sixth sentence of paragraph (1) (as amended by 
     subsection (b))--
       (A) by striking ``each such Board'' and inserting ``each 
     such banking agency and the National Credit Union 
     Administration Board'';
       (B) by striking ``banks or savings and loan institutions 
     described in paragraph (3)'' each place such term appears and 
     inserting ``depository institutions subject to the 
     jurisdiction of such agency'';
       (C) by striking ``(A) any such Board'' and inserting ``(A) 
     any such Federal banking agency or the National Credit Union 
     Administration Board''; and
       (D) by striking ``with respect to banks, savings and loan 
     institutions'' and inserting ``with respect to depository 
     institutions'';
       (3) by adding at the end of paragraph (1) the following new 
     sentence: ``For purposes of this subsection, the terms 
     `Federal banking agency' and `depository institution' have 
     the same meaning as in section 3 of the Federal Deposit 
     Insurance Act.'';
       (4) in paragraph (2)(C), by inserting ``than'' after 
     ``(other'';
       (5) in paragraph (3), by inserting ``by the Director of the 
     Office of Thrift Supervision'' before the period at the end;
       (6) in paragraph (4), by inserting ``by the National Credit 
     Union Administration'' before the period at the end; and
       (7) in paragraph (6), by striking ``the Board of Governors 
     of the Federal Reserve System'' and inserting ``any Federal 
     banking agency or the National Credit Union Administration 
     Board''.

     SEC. 11. ENFORCEMENT BY STATE ATTORNEYS GENERAL

       (a) In General.--Except as provided in subsection (f), a 
     State, as parens patriae, may bring a civil action on behalf 
     of its residents in an appropriate State or district court of 
     the United States to enforce the provisions of the Federal 
     Trade Commission Act or any other Act enforced by the Federal 
     Trade Commission to obtain penalties and relief provided 
     under such Acts whenever the attorney general of the State 
     has reason to believe that the interests of the residents of 
     the State have been or are being threatened or adversely 
     affected by a violation of a subprime mortgage lending rule 
     or a nontraditional mortgage loan rule promulgated by the 
     Federal Trade Commission.
       (b) Notice.--The State shall serve written notice to the 
     Commission of any civil action under subsection (a) at least 
     60 days prior to initiating such civil action. The notice 
     shall include a copy of the complaint to be filed to initiate 
     such civil action, except that if it is not feasible for the 
     State to provide such prior notice, the State shall provide 
     notice

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     immediately upon instituting such civil action.
       (c) Intervention by FTC.--Upon receiving the notice 
     required by subsection (b), the Commission may intervene in 
     such civil action and upon intervening--
       (1) be heard on all matters arising in such civil action;
       (2) remove the action to the appropriate United States 
     district court; and
       (3) file petitions for appeal of a decision in such civil 
     action.
       (d) Savings Clause.--Nothing in this section shall prevent 
     the attorney general of a State from exercising the powers 
     conferred on the attorney general by the laws of such State 
     to conduct investigations or to administer oaths or 
     affirmations or to compel the attendance of witnesses or the 
     production of documentary and other evidence. Nothing in this 
     section shall prohibit the attorney general of a State, or 
     other authorized State officer, from proceeding in State or 
     Federal court on the basis of an alleged violation of any 
     civil or criminal statute of that State.
       (e) Venue; Service of Process; Joinder.--In a civil action 
     brought under subsection (a)--
       (1) the venue shall be a judicial district in which the 
     lender or a related party operates or is authorized to do 
     business;
       (2) process may be served without regard to the territorial 
     limits of the district or of the State in which the civil 
     action is instituted; and
       (3) a person who participated with a lender or related 
     party to an alleged violation that is being litigated in the 
     civil action may be joined in the civil action without regard 
     to the residence of the person.
       (f) Preemptive Action by FTC.--Whenever a civil action or 
     an administrative action has been instituted by or on behalf 
     of the Commission for violation of any rule described under 
     (a), no State may, during the pendency of such action 
     instituted by or on behalf of the Commission, institute a 
     civil action under subsection (a) against any defendant named 
     in the complaint in such action for violation of any rule as 
     alleged in such complaint.
       (g) Award of Costs and Fees.--If the attorney general of a 
     State prevails in any civil action under subsection (a), the 
     State can recover reasonable costs and attorney fees from the 
     lender or related party.

     SEC. 12. HARMONIZATION OF NATIONAL DO-NOT-CALL REGISTRY AND 
                   EFFECT ON STATE LAWS.

       (a) Amendment of the Telemarketing and Consumer Fraud and 
     Abuse Prevention Act.--Section 5 of the Telemarketing and 
     Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) is 
     amended by adding at the end thereof the following:
       ``(d) State Laws Not Preempted.--Nothing in this Act or the 
     Do-Not-Call Implementation Act (15 U.S.C. 6101 note) preempts 
     any State law that imposes more restrictive requirements on 
     intrastate or interstate telemarketing to telephone numbers 
     on a do-notWithin 2 years of the completion of the Federal 
     Trade Commission study entitled "Self Regulation in the 
     Alcohol Industry"-call registry maintained by that State.''.
       (b) Conforming Amendment.--Section 227(e)(1) of the 
     Communications Act of 1934 (47 U.S.C. 227(e)(1)) is amended 
     by inserting ``interstate or'' after ``restrictive''.

     SEC. 13. FTC STUDY OF ALCOHOLIC BEVERAGE MARKETING PRACTICES.

       Within 2 years after the Federal Trade Commission completes 
     its study entitled Self-Regulation in the Alcohol Industry 
     and every 2 years thereafter, the Commission shall transmit a 
     report to the Congress on advertising and marketing practices 
     for alcoholic beverages, together with such recommendations, 
     including legislative recommendations, as the Commission 
     deems appropriate. In preparing the report, the Commission 
     shall consider information contained in reports by the 
     Secretary of Health and Human services under section 519B of 
     the Public Health Service Act (42 U.S.C. 290bb-25b), and 
     shall include, to the extent feasible, data on measured and 
     unmeasured media by brand and type of beverage, and data on 
     expenditures for slotting and discounting.

     SEC. 14. COMMON CARRIER EXCEPTION.

       Section 4 of the Federal Trade Commission Act (15 U.S.C. 
     44) is amended by striking the paragraph containing the 
     definition of the term ``Acts to regulate commerce'' and 
     inserting the following:
       `` `Acts to regulate commerce' means subtitle IV of title 
     49, United States Code, and all Acts amendatory thereof and 
     supplementary thereto.''.

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